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Vultaggio does have reason to brag: his brand dominated 2005, a year in which Coke and Pepsi fizzled. "Arizona went nuts," says Jeffrey Klineman, editor of Beverage Spectrum magazine, a trade publication. According to Beverage Digest, Arizona topped the retail iced-tea market in 2005, taking a 32.3% market share in supermarkets, convenience stores and drugstores and picking up more business than any other brand. Arizona's annual sales in major retail-distribution channels topped $417 million, according to Information Resources. The company says its total sales, including Wal-Mart and all the hundreds of tiny corner bodegas that sell Arizona, are north of $600 million.
Arizona is one of the players that has turned the entire soft-drink industry on its head. Teas, sports drinks, bottled water and energy drinks, once considered niche players, are driving the market, while the once invincible colas have lost their crown. "Carbonated beverages are in serious trouble," says Tom Pirko, president of BevMark, an industry consulting firm. Shipments of soda slipped 0.7% in 2005, says Beverage Digest--the first annual decline in 20 years. Coca-Cola's flagship, Coke Classic, was down 2%; Pepsi-Cola fell 3.2%. And soda is absorbing some of the blame for America's obesity. A study released in early March linked soda to teenage weight gain. Meanwhile, other sweetened drinks have largely escaped criticism and instead are touting their health benefits. "You can't swing a stick at a beverage convention," says Klineman, "without hitting a dozen companies talking about the antioxidant values of their drinks."
Arizona has grown through a careful combination of solid value pricing, attractive packaging and a steady stream of new products. Such new health-conscious items as Diet Decaffeinated Green Tea have thus far not cannibalized sales of its reliable iced-tea flavors. Almost all the drinks come in oversize 24-oz. cans, with the 99ยข price painted on the front to prevent retail markups, and each flavor gets a distinct look. "Arizona's marketing has been in eye-catching, aesthetically pleasing packaging," says Gary Hemphill, managing director of Beverage Marketing Corp., a research and consulting firm. "To win that shelf battle, your package has to look better than the other guy's."
The bottles have cult followings. "If I were planning a room inspired by [Arizona's] Green Tea with Ginseng," wrote interior designer Carelton Varney in the Palm Beach Daily News, "I'd go for an aqua-blue wall with a carpeting of rose pink, and I'd be certain to find an Asian print to use for drapery."