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Why Is AriZona Iced Tea Cheaper Than Water?

The company's enormous vats of iced tea are cheaper than pure water. What kind of sorcery is this?

Despite being a bladder-shattering 23.5 ounces, cans of AriZona iced tea have never wavered from the 99-cent price point introduced shortly after the drink debuted in 1992. It’s even printed on the label as a way of warding off sugar-water price gouging by retailers.

The fact that AriZona has been able to resist inflation for nearly a quarter-century is impressive. The fact that the cans usually wind up being cheaper than smaller soft drinks is also impressive, until you begin to realize how strange it is that a vat of iced tea and its accompanying ingredients somehow manages to be less expensive than plain water.

In a recent interview with Thrillist, AriZona chief marketing officer and co-owner Spencer Vultaggio shed some light on this convenience store mystery.

Unlike water titans Coke (which distributes Dasani), Evian, or Fiji, AriZona has virtually no advertising dollars invested in their teas. “We feel like it’s more important to spend money on something that our customer really cares about, instead of buying billboards or putting our cans in the hands of some celebrity for a few minutes,” Vultaggio said.

Even with a frugal approach to ads, AriZona still has to deal with rising production costs. To help resist increasing prices to compensate, the company has pursued alternative manufacturing methods, using 40 percent less aluminum in cans and having enough factories dotting the country to make transportation more efficient. Bottled water, in contrast, is sometimes sourced from abroad, making for exorbitant shipping costs.

In the end, it’s not the iced tea that’s more economical than the water; it’s that the container it comes in is simply cheaper to produce and transport. And while AriZona isn’t above charging a premium for fancier drinks—like a tea brewed with oak chips that sells for twice the price—their branding depends heavily on those familiar rows of 99-cent cans and the loyal consumers who keep reaching for them.

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Cow and Baby by Julia TortoiseHugger on Flickr.

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