How much Arizona's 99-cent Iced Tea would cost if it kept up with inflation

By Weston Blasi

Arizona founder defends 99-cent drink: 'Why have people who are having a hard time paying their rent have to pay more for our drink?'

Arizona Iced Tea launched in 1992 at 99 cents for a 22-ounce can. It still costs the same amount in 2024.

"We're successful. We're debt-free...Why have people who are having a hard time paying their rent have to pay more for our drink? Maybe it's my little way to give back."

That's what Don Vultaggio, CEO and founder of Arizona Beverage Company, said on NBC's "Today Show" this week after being asked why his company hasn't increased prices for its flagship tea products from 99 cents.

See also: PCE inflation report shows no increase in prices in May

The U.S. has been in a multi-year period of high inflation. And while it has gone down from a four-decade high in 2022, consumer prices were still up 3.3% in May compared with last year.

For example: A loaf of white bread cost $1.97 in May, up from $1.69 in June 2022, and a pound of ground roast coffee cost $5.99 in May, up from $5.79 in June 2022.

According to June data, consumers are actually optimistic about inflation compared to the previous several months, and think it will inflation will ease in the near term. The consumer sentiment index rose to 68.2 in June from an initial 65.6 earlier in the month, but it sits at the lowest level in seven months.

Despite the inflationary environment, Arizona, which makes a green tea and the famous half-tea, half-lemonade Arnold Palmer drink, hasn't changed the price of its 22-ounce drinks in 32 years.

If Arizona's prices kept up with inflation, its 22-ounce drinks would cost 124% more: $2.22, according to the Bureau of Labor Statistics' Inflation Calculator.

How has Arizona been able to keep its price below a dollar?

"'People say, 'How do you do that?' We make it faster, we ship it better, we ship it closer, the cans are thinner," Vultaggio said.

Arizona's 99-cent cans have the suggested retail price printed on them, but in some instances retailers charge a different amount for the product, according to the company.

See also: Inflation 'is absolutely killing us,' Trump says at debate. Here's which prices are still rising fast.

Most of Arizona's competitors charge more today for their products than they did in 1992.

"Our approach to pricing, whether it's in inflationary times or not, is to make sure that we keep pace with inflation," Coca-Cola's (KO) Chief Financial Officer John Murphy told the Wall Street Journal in 2023.

Arizona tea products are one of several cheap products that consumers cheer for keeping their price unchanged. Examples of others include Costco's (COST) $1.50 hot dog-and-soda combo, which has stayed at the same price since 1985, and many dollar pizza-slice shops in New York City.

"I don't know about never, but not in the foreseeable future," Vultaggio said about the possibility of a price increase at some point. "We're going to fight as hard as we can for consumers because consumers are my friend."

Read on: Here's how much profit McDonald's makes on its new $5 meal

-Weston Blasi

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06-28-24 1311ET

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