The Real Reason Arizona Drinks Only Cost 99 Cents

Here's something to try and wrap your brain around. Why is it that if you walk into your local convenience store and grab a bottled water and an Arizona iced tea, the water is likely to cost more than the Arizona tea? 

The brand makes it known how much of a "great buy" it really is by plastering the 99-cent price right onto their giant 23-oz metal cans. It's impossible to find a drink that offers so much for so little, and Arizona has been the same price for over a decade. So how is it that their tea is cheaper than even some brands of bottled water? For starters, try to think back to the last time you saw an Arizona iced tea commercial, or billboard, or magazine ad... or any sort of advertising. If you're drawing a blank, this is because their advertising budget is basically zilch. 

According to an interview in Thrillist with the brand's co-owner, Spencer Vultaggio, not advertising has allowed them to keep the price almost frozen in time. "It's a big part of our overall strategy, and our business model is such that we don't advertise for example, and we put those costs towards giving our consumer the value they want and expect," Vultaggio said.

Advertising is incredibly costly for companies. For example, Red Bull spent $30 million on marketing in 2018 — and that was just in the United States (via AdWeek). Keeping their cans out of the "hands of some celebrity" isn't the only way Arizona saves money, though. The little advertising that it does do is limited to its social media presence. 

Vultaggio said they've also found ways to squeeze some extra cash out of their production costs too. "We pack our cans at almost double the speed as we did in the late '90s, we've thinned out the cans using 40 percent less aluminum, and using more recyclable materials," he said. Even their drivers are instructed to make night deliveries to avoid wasting gas by sitting in daytime traffic. 

Even with Arizona's incredible cost-saving strategies, riding the 99-cent wave is bound to end eventually. 

Unfortunately, there are some stores out there that choose to ignore the 99-cent label on the metal can, jacking up the price and charging as much as $2! Vultaggio said that's unfortunate, but admitted that "... it's hard to police that, nationwide." Despite some stores trying to sell Arizona tea for more than the suggested price, the brand is also having a tough time maintaining that low price. 

According to MarketWatch, between 2013 and 2018, the tea industry grew 2.2 percent and is expected to grow another 1 percent in the next five years. Brands like Coca-Cola's Gold Peak are giving Arizona a run for their money and are likely an indicator that the 99-cent price is on the way out (via Quartz). 

Long story short, you better enjoy that 99-cent tea while you can, because as one person pointed out in July 2019, it appears that Arizona is now printing $1.29 on some of its cans (via Twitter).