The 99-cent pricing puzzle
Editor's note: Ted Benzing is a vice president at TRC Insights. He has spent 20-plus years helping brands answer tough pricing questions through custom quantitative research. He earned his MBA in marketing insights and analytics from the University of Wisconsin–Madison and previously worked at Villanova University and MetrixLab. The author wishes to thank Allan Peters for his support with this article and its imagery. Find Benzing on LinkedIn.
Recently, two of my sons (aged 10 and 12) discovered AriZona iced tea. When I was a young buck in the 1990s, the product had just launched and it was very popular. I was also a big fan around that same age.
When I looked at one of the cans they had finished downing I was quite surprised to see that it still said “99 cents” on it. Now, I’m pretty sure it was 99 cents when I was a kid and after all these years of inflation and tariffs, not to mention higher raw material costs, how can the product still be 99 cents? To find out, I dug into things a bit more. The story is truly amazing!
AriZona, price anchoring and inflation – a brief recap
AriZona has indeed held the 99-cent price point for over 30 years (since 1992), which is almost unheard of in the world of consumer packaged goods. What makes this even more interesting is that the company didn’t just keep the price – it turned it into a brand promise by printing “99¢” directly on the can in the late 1990s to prevent retailer markups. And all these years later, it’s still fighting that same battle!
Now let’s layer in inflation:
- Something priced $0.99 in 1992 would be about $2.30–$2.40 in 2026 dollars. Source: U.S. Bureau of Labor Statistics CPI Inflation Calculator.
- That’s roughly a +130% to +140% increase in general price levels.
So, in real dollar terms, AriZona has effectively cut its price in half over the past 30 years.
From a pricing research perspective, this is a classic example of extreme price anchoring. Consumers don’t just prefer the 99-cent price – they expect it, and anything above it feels like a violation of the brand. Don Vultaggio, the current chairman and founder of AriZona, has made affordability and value part of the brand for years. “When somebody lays their hard-earned dollar on the table and gets a can of tea or juice and says, ‘Wow, that’s a good deal,’ that’s what makes me happy,” he has said.
Through the lens of my kids, the appeal of a 99-cent can of AriZona iced tea (or Mucho Mango or any of the other varieties) is obvious: It’s cheap! It’s hard to get anything for a dollar these days, especially in a convenience store setting. So, when one of my kiddos goes in with five bucks, he’s aiming to maximize value, snagging a drink, a snack and some candy.
Side note: Recently, at the IGA grocery store in East Hampton, N.Y., a can of AriZona iced tea was going for $1.29 – blasphemy! Now, take into consideration that the east end of Long Island – and specifically East Hampton – is a vacation community and one of the most expensive places in the country. And even there, the retailer barely moved off the 99-cent price (which, of course, was still on the package). Everywhere else in our experience, the price has been 99 cents!
As an expert in pricing elasticity research and shrinkflation, here are the main questions I wanted to answer:
- Has AriZona changed the size of the can? Nope – still 22 ounces, same since the late 1990s. (Although it was 23.5 ounces at the very beginning. We will ignore that little piece of shrinkflation.)
- Has the company changed the actual product in the can? My initial thought was that watering it down would be an easy way to save on margins. AriZona claims it has not done so and I do believe the company. The nutrition labels and ingredients have looked similar over the years.
- What about profitability? Does the company have investors? AriZona claims it has taken a margin hit over the years – obviously! But, it’s privately held, with Vultaggio holding close to 100% of the company. The firm doesn’t have debt and just maybe profits aren’t the No. 1 priority, since Vultaggio and his family are worth $5.9 billion, according to Forbes.
To be fair, AriZona also has other product formats – like the 12-pack of cans, a one-gallon jug and more. It presumably has higher margins on those SKUs, to help with the overall bottom line. The 99-cent can is only a fraction of AriZona’s overall sales. So, it may barely break even and still be OK for the company.
A historical example of price anchoring
Coca-Cola faced a similar pricing issue. From roughly 1886-1959 coke was 5 cents. You read that correctly. That is over 70 years with the exact same product and price! (AriZona still has a way to go.)
Coke faced a lot of price anchoring issues over this period; the main one was that a very large percentage of Coke was sold in vending machines. By design, these machines only accepted nickels and they didn’t give change. This was a problem.
When Coca-Cola seriously tried to raise the price after World War II, it was very tricky, because of the distribution system and consumer perception. Eventually, around 1959, Coke managed to reconfigure the machines to accept dimes and give change. This is when the pricing went to 10 cents a bottle – a 100% increase! But it wasn’t smooth for about a decade. Coke messed with vending machine configurations and even lobbied the U.S. government to mint a 7.5-cent coin, understanding that going directly from 5 cents to 10 cents was a huge increase and could seriously damage the brand.
The tipping point for AriZona
Assuming AriZona iced tea stays in business for another 40 years, it will have to raise the price at some point – or will it?
There are several factors that could push AriZona over the tipping point and here are my leading candidates:
1. Aluminum prices. Aluminum is one of the biggest pressure points for AriZona and it has been extremely volatile. Prices have increased significantly over the past decade and spiked during supply shocks.
- In recent years, prices have hovered around $2,200-$2,600 per metric ton, compared to closer to $1,500-$1,800 in the early 2010s.
- At the peak of recent tariff-driven shortages, U.S. aluminum buyers paid over $4,500 per metric ton when combining the global aluminum price, U.S. delivery premiums and tariffs.
Source: World Bank Commodity Data / IMF Primary Commodity Prices
2. Sugar prices. While sugar prices are often discussed when talking about beverage costs, most iced tea and soda products – including many AriZona varieties – are sweetened with high fructose corn syrup (HFCS). When AriZona launched its 99-cent can in the early 1990s, HFCS prices were relatively low.
- Mid-1990s HFCS price: roughly $0.13-$0.17 per pound (dry weight equivalent).
- Recent HFCS prices: roughly $0.30-$0.40 per pound.
Source: USDA Economic Research Service Corn Sweetener Price Series
That means HFCS prices have roughly doubled to tripled since the 1990s, creating another source of cost pressure for beverage producers trying to hold retail prices steady.
For a beverage company selling billions of cans, even small ingredient cost increases matter – especially when the retail price of the product hasn’t changed in more than three decades.
3. Water costs. AriZona Beverages is headquartered in Woodbury, N.Y. (Long Island), but production is spread across the U.S. to reduce shipping costs.
Water itself is relatively low-cost, but:
- Industrial water + treatment + energy costs have risen recently.
- Northeast utilities (N.Y. region) tend to be higher than national averages.
- Water isn’t the biggest driver but it contributes to overall cost pressure.
4. Shipping costs. As I write this article in mid-2026, gas prices have gone nuts, therefore shipping prices have risen too. Any liquid product, like AriZona, is very heavy and expensive to ship.
It could also be a combination of these factors that pushes AriZona to the point where it can no longer survive selling 99-cent cans. 
Recommendation for AriZona – price optimization research with consumers
If AriZona is ever in a position where the company is seriously considering raising prices, it should conduct some price elasticity research to measure consumer perceptions and response to a higher price.
Any increase will have some impact on consumer demand and brand equity and it is a delicate balance for AriZona.
The best way to conduct this type of price sensitivity analysis is to run a choice-based conjoint analysis with AriZona and competitive products. Here are the basics:
- Run an online survey with U.S. consumers who drink iced tea on a fairly regular basis.
- Obtain a decent sample size to reduce sample error and increase statistical reliability – N=1,000-2,000 would be good.
- Give consumers a shopping exercise with varying brands and prices – include competitors like Snapple, Lipton, Peace Tea, etc.
- Run simulations that show pricing demand curves, revenue curves and profitability.
- Give recommendations on pricing strategy for AriZona.
AriZona should test a few different prices in this research:
- $0.99 – Use as a benchmark price, to reference against competition and other AriZona prices.
- $1.29 – a very safe price increase that many consumers will likely be OK with. AriZona would still be very favorably priced against competition. Downside is that the margins may still be slim and AriZona might have to consider another increase over the next few years.
- $1.49 – This may be the best balance of consumer perception and increased margins. It would also be a good price to lean into over the next 20+ years.
- $1.79 and/or $1.99 – It would be interesting to test these prices to see the drop in consumer demand and perception. $1.99 would make AriZona comparable to other brands; would customers still buy it? Also: $1.99 may have a massive impact on brand equity and trust.
A simple promise
The AriZona story is ultimately a lesson in price anchoring. For more than 30 years, consumers have associated the brand with a simple promise: a large can of iced tea for 99 cents. Over time, that number has become part of the product itself, which makes any future price increase a brand decision and a financial one.
AriZona may eventually reach a tipping point as aluminum, sweetener and shipping costs continue to rise. If that moment comes, careful pricing research will be critical. Understanding consumer price sensitivity, competitive context and demand elasticity can help brands navigate price changes without damaging long-term brand equity.
There are many ways to conduct pricing research, the simplest being monadic-split cell research, Gabor-Granger or Van Westendorp price sensitivity meter.
Conjoint research is more complex and always includes competitive context, so it is more accurate for big decisions, like AriZona may face soon.
Until then, AriZona’s 99-cent can remains one of the most remarkable pricing stories in the CPG world and a great reminder that sometimes the most powerful number in marketing is simply the price. My kids definitely agree!