Don Vultaggio, owner of the beverage company behind Arizona Iced Tea, Arizona Beverages USA, delivered a refreshing take on product pricing in June. When he launched his company in 1992, a 23-ounce can of Arizona iced tea was 99 cents. Thirty-two years later, a similarly-sized can sells for the exact same price.
When asked by TODAY’s Savannah Sellers why he hasn’t raised the price, Vultaggio responded candidly. “We’re successful. We’re debt-free. We own everything. Why? Why have people who are having a hard time paying their rent have to pay more for our drink?” he said. “Maybe it’s my little way to give back.”
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Although he didn’t commit to a permanent price freeze, Vultaggio was confident his customers shouldn’t expect to pay more for his drink in the foreseeable future. “We’re gonna fight as hard as we can for consumers,” he told Sellers.
In the midst of pervasive inflation, this commitment to price stability is likely to build immense goodwill with consumers. Grocery prices in America are 25% higher than they were in 2019, according to data from the U.S. Department of Agriculture. And as of 2022, 44.2 million people lived in households that struggled to provide enough food to feed everyone.
In this pricing environment, consumers can appreciate major brands that either freeze or slash prices. That’s why other big-name brands have made an effort to hold on to customer loyalty by locking in affordable prices for Americans.
Costco
Costco’s unique membership-based business strategy isn’t the only reason it’s popular with consumers. The retail giant is best known for its hot-dog-and-soda combo that’s been priced at $1.50 since it was first introduced in the 1980s.
The hot dog’s price is so synonymous with the Costco brand that when a new CEO wanted to change it, co-founder Jim Sinegal once pushed back swiftly: “If you raise (the price of the) effing hot dog, I will kill you.”
And his passion dates back some 15 years. In a 2009 interview with The Seattle Times, Sinegal pointed to the deal as one of the retailer’s biggest draws. “We’re known for that hot dog,” he said. “That’s something you don’t mess with.”
That value still holds true, as the price remains the same even today. But, Costco’s efforts to maintain longstanding customers through pricing may end at the food court. On September 1, 2024, the individual membership fee will cost an extra $5 per year, according to a statement released this month — the first price increase it’s had since 2017.
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Ikea
The Swedish furniture retailer is well-known for its affordable prices and elegant designs. Now the company has generated an even larger customer base doing something unusual: dropping prices further.
The furnishing brand has announced at least three rounds of price cuts within the last year on hundreds of products as the cost of raw materials and transportation eased.
In a statement, Tolga Öncu, head of retail at Inkga Group, the biggest IKEA retailer, said reduced costs were only part of the reason for the price drops. The company had also made investments to improve efficiency which helps pass savings onto consumers. IKEA’s mission, according to the statement, is to “restore prices long term and reach their inflation-adjusted pre-pandemic levels by the end of next year.”
Inflation-adjusted pre-pandemic prices should be music to the ears of millions of consumers. With more brands acknowledging the positive impact more affordable pricing can have on both the customer and business, it’s possible others may catch on to the cuts if they can afford to.
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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
Source Agencies
