Choosing option 3
The first two might be easier, but the third is the best.
When times get tough and costs go up, companies have three choices:
First choice: They can bunker. These are the companies that keep prices stable and employees secure, and who simply allow higher costs to eat into their profits.
Second choice: They can share the pain. These are the ones that, however begrudgingly, raise their prices or lay off employees (or don't hire as many as they might), in order to cut costs.
Finally, they can take inspiration and pursue ingenuity. They can decide to find smarter, more productive ways to work -- so as to protect customers, employees, and their own self-interest.
America, let's choose option 3.
And, if you want to identify the company that just might have set the standard in this regard, it's one that's been staring us right in the face for more than 32 years.
That would be Arizona Beverages USA, which has filled convenience store coolers with its cans of iced tea since 1992, and has trumpeted its same low price, 99 cents per can, the entire time.
Why keep the price constant for so long? Mainly because they can, founder Don Vultaggio said in an interview recently.
"We're successful, we're debt-free, we own everything," he told Today in an interview, adding: "Why have people who are having a hard time paying their rent have to pay more for our drink?"
Interestingly, unlike say, Costco with its $4.99 rotisserie chickens (or its $1.50 hot dog and soft drink combo), there's no indication that Arizona Iced Tea cans are a loss leader.
The company has other products, including a merchandise line, but Vultaggio and others cite a number of things the company has done to cut costs and keep the canned iced tea price low.
"We make it faster, we ship it better, we ship it closer, the cans are thinner," he told Today. But most interesting to me is what the company did last year, reducing the size of its 99-cent cans from 23 ounces to 22 ounces.
Vultaggio said shortly after that the idea was to make the cans smaller in order to save on the cost of aluminum (as opposed to saving on the cost of the drink itself), but that he still struggled with the idea.
Look, there are no guarantees in life. Asked point-blank if Arizona iced tea will stay at 99 cents forever, Vultaggio told Today: "I don't know about never, [but] not in the foreseeable future. We're going to fight as hard as we can for consumers."
Frankly, I think that's all some consumers are asking for.
We understand that at the end of the day, the math has to make sense, but we appreciate seeing companies that try to keep costs and prices low.
This is what brings us to the biggest paradox of all, which is that in keeping the price at 99 cents, Arizona gets a huge boon in earned media -- like 5-minute segments on the Today show, and even if i can flatter myself, newsletters like this.
As a result, Arizona has nowhere near the marketing expenses of other big competitors.
That's another reason to like the idea of choosing Option 3.
Ingenuity breeds ingenuity, and sometimes you can wind up with benefits you didn't even contemplate when you originally made the choice.
7 other things …
Israel vowed Hezbollah will “pay the price” after blaming the Lebanese militant group for a rocket attack in the Israeli-occupied Golan Heights that killed 12 children, touching off fears once again that an all-out war would envelop the region. Hezbollah says it “firmly denies” it was behind the strike, the deadliest to hit Israel or Israeli-controlled territory since the October 7 attacks. (CNN)
Interstate 15 between Los Angeles and Las Vegas reopened after a 48-hour closure due to a truck accident that created a chemical hazard. The highway had been closed after a big rig carrying lithium batteries overturned, caught fire and created a hazmat situation — and a traffic nightmare stretching for miles in the desert heat. The remote location of the crash made it especially difficult for emergency responders. (LA Times)
A powerful Mexican drug cartel leader who eluded authorities for decades was duped into flying into the U.S., where he was arrested. Ismael “El Mayo” Zambada got on an airplane to the U.S. believing he was going somewhere else. Upon arriving in the El Paso area, Zambada and Joaquín Guzmán López, a son of notorious drug kingpin “El Chapo,” who was sentenced to life in a U.S. prison in 2019, were immediately taken into custody by U.S. authorities, officials said. (AP)
Just under 100 days to go, and the presidential race between Kamala Harris and Donald Trump is now essentially tied, according to the Wall Street Journal. Trump leads Harris 49% to 47% in a two-person matchup, but that is within the margin of error of plus or minus 3.1 percentage points. Trump held a six-point lead earlier this month over President Biden before he exited the race and backed Harris. (WSJ)
The 25 people in Roche Holding AG’s obesity pill study would barely be enough to field both sides of a soccer match, but their weight loss added $16.8 billion to the Swiss drugmaker’s market value in a day. “The reason this is so different is because the end market size is just so big,” said the head of an investment firm with $4.65 billion invested in pharma. “You just do the math.” (Bloomberg)
There are a lot of Olympics stories of course, but this one caught my attention at the outset: An Australian field hockey player injured his finger in practice and was told recovery would take so long that he would miss the Olympics. So he opted for amputation instead. (USA Today)
Freaky footage captured a swarm of dragonflies turning a Rhode Island beach into a scene akin to a Biblical plague over the weekend. The seemingly endless swarm of dragonflies descended on Misquamicut Beach in Westerly on Saturday, when a cloud of the insects started buzzing across the beach, under umbrellas and chairs, past faces and between legs. (NY Post)
Thanks for reading. Random 14-year-old photo of an AriZona Iced Tea can by Adeline on Flickr. I wrote about some of this before at Inc.com. See you in the comments.
the wizard who taught me retail business asked me, how much are you willing to spend to get a customer to walk through your front door? Nothing works as effectively as loss leaders like a $4.99 chicken and $1.50 hot dog. If the company loses a dollar on each, they've built a base of repeat customers lon the cheap. Those are customers not just shoppers who will spend a lot more than a dollar shopping. It creates goodwill whereas an item on sale says to the customer, catch me if you can; i.e., is it on sale when the customer needs it or wants it? is it a closeout? out of season? Dr. Harold Goldmeier
Always enjoyed drinking Arizona Iced Tea. It came pretty close to what I brewed here at the house. Truly amazing about how they’ve kept their product not only still delicious but the same price while everyone else went up-because they could.