AriZona Iced Tea is unique in the non-alcohol beverage market. It does not spend money on advertising and has kept its price per can at 99 cents since its founding in 1992. AriZona Iced Tea dominates their portion of the market with a loyal customer base and a motivated workforce.
Analysis Several things led to AriZona Iced Tea’s success. These include the founders’ commitment to maintaining the price per can at 99 cents, a loyal customer base, and a workforce fully motivated to lowering costs. To reduce costs, AriZona Iced Tea has reduced the quantity of aluminum per can, improved the efficiency of their packaging process, and decentralized their canning centers. Also, by printing the 99¢ price on each can, merchants are discouraged from charging more than 99 cents.
Case Questions 1. What was the beverage market like in 1992 when AriZona entered?
2. How did AriZona Iced Tea differentiate itself from competitors and maintain dominance in their segment?
3. Why have merchants kept AriZona products in their stores despite low margins per can?
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