The Success of AriZona Tea

Teas are an American staple. Who doesn’t like to brew a fresh batch of ice cold tea on a hot summer day? John Ferolito and Don Vultaggio sure liked their tea; enough to turn it into a billion-dollar business.

            Before creating AriZona, John and Don were two New York distributors who started off making money as developing malt liquor. Both of the men had delivery jobs at breweries and local beer distributors. They came up with the idea to do business together in the 1970s. Together, they bought a VW bus and delivered reduced price beer and sodas to homes and local grocery stores. Soon, they quit their ‘real’ jobs and did this full time. Their success came from making the product as cheaply as possible and also selling it as cheaply as possible. They promoted it in neighborhoods that had high crime rates; small markets around Manhattan and Brooklyn. They did fairly well with their liquors, Crazy Horse and Midnight Dragon. After a few bouts of negative press however, their sales fell. They set their eyes on teas.

            John and Don were inspired by the new age beverage market. More specifically, they were inspired by Snapple and the fact that they had tremendous growth with little hassle. Their goal was to provide a cold, ready-to-drink, non-chemical tasting tea. Don’s wife had just been to Arizona and came back enchanted by the South West. Since Arizona has a connotation of hot, they figured it would be a good brand name. Thus, the name AriZona was birthed. Because of their history in the liquor business, the men used their 24oz cans with bright, pastel South-Western designs to bottle their teas. Experts warned them that the pastel designs would fail them; they would not stand out amongst other cans. They were proved wrong when their sales in the early stages were an instant win. Customers had not really seen big tea cans like this before. They were selling their tea in bigger batches for cheaper versus Snapple’s small, more expensive teas, a clear selling point for consumers.

            The men found almost overnight success in the early 1990’s. By the middle of 1993, AriZona was in more than 30 states. Before the end of 1994, it was sold in all 50 states and making 300 million a year! They were holding the annual advertising budget to $1 million—and in comparison, to Snapple's $33 million and Lipton's $17 million in 1996, this was a steal. The company tried its hand in other drinks; a collection of Cowboy Cocktails with flavors such as Mucho Mango and Strawberry Punch. They continued expanding with flavors like ginseng, diet teas, iced coffees, and even a beer called Mississippi Mud. These were not as popular as their original tea lines.

The success of AriZona was lined with hard work and an all-in attitude. Ferolito once said, "We're high class enough to be No. 1, and low class enough to know how to get there."

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