AriZona CEO on How the Tea Brand’s Winning Foray into Snack Food Revealed Its Next Big Growth Opportunity

Three keys to AriZona Beverage Co.’s successful product expansion, according to CEO Abid Rizvi:

• Rizvi’s business philosophy for AriZona comes down to three key pillars: great taste, a good-looking product, and a low price that encourages shoppers to take a chance on something they might have never tried before.
• AriZona has built close relationships with its customers without relying on splashy marketing or in-depth focus groups, instead doubling down on its signature combination of iconic visual branding and inflation-resistant pricing.
• When developing a new product or pursuing a new retail relationship, AriZona builds in opportunity for iteration and experimentation along the way. Small steps and incremental growth often prove more fruitful in the long term.

In an unprecedentedly changing consumer landscape, AriZona Beverage Co. remains a rare constant. Since the company’s launch in 1992, its familiar packaging design and 99-cent 23-ounce cans of iced tea have decorated the fridge cases and shelves of gas stations, convenience stores, drug stores, and grocery retailers across the U.S.

While AriZona isn’t immune to the effects of inflation or economic instability, the company has thus far managed to avoid raising prices or making drastic changes to its legacy products. This has helped the brand retain a longstanding popularity among loyal customers, as well as successfully connect with new generations of young consumers.

According to 2021 data from Euromonitor, AriZona represented 15.7% U.S. market share of the ready-to-drink (RTD) tea category, second only to Pepsi-Lipton. The overall RTD tea market is forecast to continue steady growth, with Mintel estimating it to reach $9.9 billion by 2026.

“Tea drinkers are thirsty for more options,” wrote Mimi Bonnett, Mintel’s Senior Director of U.S. Food and Drink, in the market research firm’s report on the category. “Brands can continue to help consumers figuratively quench this thirst by helping to facilitate education, product trial and teatime inspiration.”

To this end, AriZona is — for the first time — broadening its strategic focus beyond beverages into the on-the-go snacks category, while launching a new hydration drink in collaboration with Marvel.

Here, Chief Executive Officer Abid Rizvi shares insight into how the brand identified gummy fruit snacks as its next growth category, and why AriZona remains committed to the same price points since the 1990s.

CO—: AriZona is famous for consistency – familiar packaging and the same low prices. What is the brand’s big picture strategy?

AR: As a brand, we've had a surprisingly consistent strategy for 30-plus years at this point. It boils down to three components, no matter what we bring to market: We make sure we make [the product] look good, we make it taste good, and we price it fair. Those three core pillars are always there, and they kind of reinforce each other. If something looks good, then it pops on the shelf. If it is priced fair, then you lower the barrier for some consumers to try the product. If they buy the product and it tastes great, then they hopefully come back for more.

CO—: What is AriZona’s approach to making changes or launching new releases?

AR: Our philosophy has always been to never go out and bet the farm on anything. It's almost like mountain climbing – you take a few steps and see if you have a good grip before you make a big leap, so to speak. We make small investments, see if something works, and if it's working, then [we] double down on it. When Don [Vultaggio, Co-founder] launched this business, he only put a couple of SKUs in 10 different stores to see if there was even a demand for the product. Those 10 stores sold out quickly, and the rest is history.

CO—: Why did the company choose gummies as its next category for expansion? How do they fit in with Arizona’s existing drink business?

AR: In 2017, when we were celebrating our 25th year anniversary, we did a pop-up in the Soho area [of New York City] as a brand-building event. We had AriZona-inspired apparel and our beverages there, but we also had done some specific items that we had prepared just for the pop-up, and fruit snacks happened to be one of them. We worked hard to develop it and we did a minimum run, which was 70,000 pounds. Back then it seemed like an enormous number, but that was one of the first items that we sold out of at the pop-up. Then we knew that the AriZona consumer was looking for an AriZona fruit snack – it's a very natural extension of where our consumer is. It didn’t require a lot of selling to convince somebody who likes our beverages to try the fruit snacks.

So, then we took that product and put it into our own system, with our own distribution in certain regions of the country including the New York area, Florida, and Texas, and that also did well. We doubled down on it, went out to the national accounts, and it's been a tremendous success. This year, we’re going to sell millions of pounds of fruit snacks.

[Read: 3 Scaling Startups Each Share Their Playbook for B2B Growth]

CO—: How has the consumer response been to the gummies? Do you feel like you've expanded AriZona’s consumer base, or have you focused on generating more sales from an existing loyal fan base?

AR: For us, it’s completely incremental. For some of the retailers, I believe we have expanded their sales of the fruit snacks category because we're bringing incremental consumers to that category with the familiarity and the recognition of the AriZona brand name [in beverages]. And most importantly, it is the trust factor that we have built over 30 years of serving our customers.

CO—: Do you have any advice that you would give an emerging brand looking to get their products onto store shelves?

AR: There's a lot of entrepreneurs and a lot of small companies who somehow get enamored with, for example, selling at Walmart [right out of the gate]. But if you study most successful entrepreneurs, they usually didn't bet the farm on a single big bet.

It’s a long game. If you put your product in a few stores, you can really ensure that the execution is as close to perfect as possible, and then see the results. Maybe you made some mistakes, maybe there's a flavor that you could tweak a little bit, maybe the packaging didn't resonate the way you wanted to. If you do that in a Walmart with a national launch and it doesn't work out, then you're done. But if you do it in a small format, you can tweak it and see what truly resonates, and then you replicate it on a national basis. It's a hell of a lot lower risk to do that, in that methodical, deliberate way.

[Read: Why Top Brands Are Using These Pricing Strategies to Drive Business in a Challenging Environment]

CO—: Given the brand’s commitment to the 99-cent price point for its cans of iced tea, how does AriZona handle uncertainty, whether it's inflation or the threat of a potential recession?

AR: We've never, ever lost touch with our consumer. We have a pretty good understanding of who our consumer is, and what that consumer likes and enjoys. We've always been there for our consumer, so as long as we can keep our price as approachable – the 99-cent can being the perfect example – we will stay there. Now, we haven't stayed there by cheapening the product but by taking costs out behind the scenes.

The thing that is unique about AriZona is that the leadership team is in the weeds; we are not just sitting in some ivory tower, giving directions to the troops. Not a single product gets launched with the AriZona brand on it that we haven't personally tested and agreed that [it] is the best product that we can launch.

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