AriZona iced tea has been one of the sweet holdouts at 99 cents, even as coffee, rent and streaming subscriptions have climbed year after year. But that price tag that has remained the same for 30 years may be on the verge of breaking.
Founder and chairman Don Vultaggio says he’s now weighing a move he’s avoided for more than three decades: raising the cost of the brand’s iconic tallboys.
“I hate even the thought of it,” Vultaggio told The New York Times. “It would be a hell of a shame after 30-plus years.”
The pressure comes from a 50% tariff on aluminum imports imposed under the Trump administration, which has made AriZona’s signature cans far pricier to produce. The company use more than 100 million pounds of aluminum each year, with 20% sourced from Canada.
While Vultaggio hopes the trade dispute resolves before consumers feel the impact, he admitted the cost can’t be absorbed forever.
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How AriZona found its flavor
Growing up in Brooklyn’s Flatbush neighborhood, Vultaggio often overheard his father — a manager at an A&P grocery store — discussing retail and labor issues. After high school, he worked at a Bushwick brewery, where his interest in materials over brewing led him and partner John Ferolito to start a beer distribution business — that seed that became AriZona.
The turning point came on a frigid day in 1991, when Vultaggio spotted a truck unloading cases of Snapple in Lower Manhattan.
“I went home that night and told my wife, ‘We’re going into the iced tea business,’” Vultaggio said. “I didn’t know beans about iced tea.”
To stand out, his wife Ilene — a pastel artist — designed a bold turquoise, pink and yellow sunburst. When naming the brand, they wanted something cool and distinctive, landing on “Arizona” and giving it a final flourish: a capitalized “Z” to make it pop.
But it wasn’t just the design that set them apart.
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Building the brand
Vultaggio says AriZona’s success rests on three simple rules: make it taste good, make it look good and price it right. The 99-cent tallboy, introduced in 1997, became a defining feature of the brand. By 2000, sales had jumped 30%.
“Our marketing was never built on anything other than just common sense,” Vultaggio said.
U.S. tariffs are expected to cost midsize businesses $82.3 billion, according to the JPMorgan Chase Institute. While midsize firms — those with annual revenues between $10 million and $1 billion — make up a third of private sector revenue and jobs, many lack the scale to absorb or negotiate away higher import costs.
AriZona pulls in more than $4 billion in annual sales, according to The New York Post, putting it well beyond the midsize category, yet it’s still feeling the effects. Aluminum prices have nearly doubled in the past 18 months, jumping from about $1,750 per metric ton to nearly $3,250. Shipping, taxes and other costs push prices even higher, with premiums rising from roughly $420 per ton in April 2019 to more than $880 today.
Privately held and vertically integrated, AriZona sells about two billion cans a year, roughly half of them tallboys. That independence gives Vultaggio more control over pricing and operations, helping him maintain the consistency that has turned first-time buyers into lifelong fans.
99-cent strategy
About 80% of the aluminum AriZona uses for its tallboys comes from recycled material made in the U.S. The rest is imported from Canada and is subject to a 50% import duty. “Our price has been dramatically bumped up because of this tariff talk,” Vultaggio said.
If your favorite products are starting to creep up in price, remember that even the most stubborn price holds can’t dodge rising costs forever. When tariffs hit, companies face tough choices: absorb the costs, cut corners or pass them on to customers. Brands like AriZona, which control much of their production, can hold the line longer but not indefinitely.
Before Vultaggio was running a multibillion-dollar brand, he was a blue-collar worker making every dollar count.
“I started out as a blue-collar guy, and budgeting your finances on a daily basis was a part of life,” he told The Los Angeles Times.
With tariffs pushing prices higher across industries, this might be a good time to take a closer look at your budget. Set aside a small monthly cushion to cover unexpected cost increases. Track the prices of the products you rely on so you can spot hikes early and stock up. Pay attention to economic signals like tariff announcements and commodity price swings — they’re often the earliest warning signs that your grocery bill, utility costs or even your afternoon iced tea could be next.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
