A common trend of brand price inflation

– No one needs a headline to know that prices are up. This is evident with just about anything price tags and supply chains, including the ready-to-drink iced tea market. While prices for other major products in the beverage department are up across the board, for Los Angeles Times, there is one notable exception: AriZona Iced Tea. The company’s base 23-ounce product is still only 99 cents, and it has been that way for 30 years. “I’m committed to this 99 cent price – when things go against you, you tighten your belt,” said company founder and Brooklyn native Don Vultaggio.. It earns less per can, but it sells a billion cans a year in a crowded market where other big brands like Lipton and Snapple are all owned by global giants. Competing brands are about twice the price.

Vultaggio and his family now comfortably rank 764th Forbes‘ billionaire rankings, and their independence gives them flexibility on how to manage prize money. Coke still held the record for the most fixed drink price: 5 cents a bottle for 70 years, until 1959, when it finally broke the “nickel spell”. Coke was hemmed in by commercial contracts and its self-made infrastructure of vending machines that only took nickels. For AriZona, the famous “psychological effect” of the number 9 itself could be a factor; according to an economist, retailers with fixed prices ending in 9 “are more resilient to changes in the market” during inflationary cycles. But Vultaggio has his own explanation: “It’s been that way since cavemen, the price of 99 cents was exciting then, and it’s exciting now.” Read the full story. (Read more inflation stories.)

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