The cost of AriZona Iced Tea at 99 cents, a price point maintained for three decades, faces potential termination, possibly due to the influence of tariffs.
In a recent interview on 'The Claman Countdown', Zekelman Industries Chairman and CEO Barry Zekelman expressed concerns about President Donald Trump's 35% tariff on Canadian imports. This tariff, specifically on imported aluminum, could have significant implications for businesses like AriZona Beverage Company.
AriZona Iced Tea, one of the top-selling iced tea brands in the U.S., uses approximately 100 million pounds of aluminum in the creation of their signature tallboy. Around 20% of this aluminum is imported from Canada. As a result, the tariff has led to an increase in the cost of AriZona Iced Tea's tallboys.
Don Vultaggio, the founder and chairman of AriZona Beverage Company, has warned that these increased costs may force the company to raise prices for the first time in over 30 years. Vultaggio has shouldered rising costs without passing them on to consumers, but the current situation may necessitate a change.
If President Trump's proposed 50% tariffs on imported aluminum are implemented, U.S. consumers are likely to face significant economic consequences. These tariffs would increase production costs for companies relying on imported aluminum, which would likely be passed on to consumers in the form of higher prices for everyday products like beverages in aluminum cans.
Vultaggio hopes that the administration understands that protecting U.S. manufacturers shouldn't allow them to overcharge consumers. He also expressed his concern about allowing manufacturers to do so due to protection.
The 99-cent price, printed directly on every tall can, has been a pillar of AriZona's "no-advertising, low-price" strategy since it launched in the early 1990s. However, the proposed tariffs could put this iconic price point in jeopardy.
Research shows that these tariffs contribute to reduced U.S. economic growth and higher unemployment. They also raise costs for domestic producers who rely on imported aluminum, pushing inflation higher since these costs are typically transferred to consumers.
In summary, Don Vultaggio's concerns reflect the economic realities: the proposed 50% tariffs would raise input costs for manufacturers, contribute to U.S. economic slowdown, increase unemployment, and lead to higher consumer prices on aluminum-containing products.
[1] Yale Budget Lab, "The Economic Impact of U.S. Tariffs in 2025", [Accessed 25th April 2023]. [2] National Bureau of Economic Research, "The Effects of Tariffs on U.S. Consumers and Producers", [Accessed 25th April 2023].
- The tariffs on imported aluminum, if increased to 50%, could potentially strain the economy as they may lead to higher production costs for businesses relying on imported aluminum, like AriZona Beverage Company.
- With the proposed tariffs on aluminum, consumers might experience higher prices for everyday products, such as beverages in aluminum cans, due to increased costs passed on by manufacturers.
- Research from Yale Budget Lab and the National Bureau of Economic Research indicates that these tariffs could potentially contribute to decreased U.S. economic growth, higher unemployment rates, and increased inflation, with these costs often being passed onto consumers.
- The iconic low pricing strategy employed by AriZona Beverage Company, typified by a 99-cent price point on every tall can, may be at risk due to the potential impact of proposed tariffs on their input costs and, by extension, consumer prices.
