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The surprising backstory of AriZona Iced Tea's name

New York(CNN Business) When Don Vultaggio was considering names for his new iced tea business three decades ago, he wanted something that connoted a "warm and healthy environment."

That meant getting far away from Brooklyn, where Vultaggio grew up. But not too far away: His friends called his New York home the Santa Fe house, because of its adobe-style design, filled with pink, yellow and turquoise colors. So he settled on "Santa Fe" for the name of the drink.

It didn't stick.

"When I put Santa Fe on the package, it didn't look right," Vultaggio told CNN Business. "I thought it looked like a train."

Thinking of places that were close to Santa Fe that would look better on a can, Vultaggio settled on Arizona -- where he'd never been. In fact, Vultaggio hadn't even traveled west of the Mississippi.

"I always associated Arizona with a healthy, clean and dry feel that was different from the Brooklyn feel," he said. "Having a name associated with a lifestyle, which is an environment and climate that made you want to grab a refreshing iced tea. That's why the name seemed to make sense to me."

AriZona was almost called Santa Fe.

AriZona Beverages, which makes the famous 99-cent iced teas, began in New York City in the early 1990s. Vultaggio, the company's cofounder, said he was inspired by Snapple, which was founded in 1972 and became a cultural phenomenon. The "Snapple Lady" commercials turned the juice and iced tea company into a huge success, as sales boomed throughout the 90s.

Having had his own success with a malt liquor business, Vultaggio and his partners pivoted to selling iced tea in the same-sized 23-ounce cans as their malt liquor. That helped AriZona stand out against Snapple's 16-ounce can.

They wanted to keep it the same price, too. And give the logo a stylized capital Z that he said just looks better on its cans.

The vibrant can, with its eye-catching checkerboard patterns and colors, was inspired by his Santa Fe house, because of the "continuous feedback and accolades we would receive from everyone" for his home's design.

AriZona's design is a "great point of differentiation with its competitors," according to Andres Nicholls, global executive creative director at consultancy and design firm Prophet. "It's been an excellent tool and place to express their personality and quickly say to the market 'we are not like everybody else.'"

Nicholls said the brand has "been pretty fearless and consistent in their approach and have created a very distinctive design."

AriZona Iced Tea made its debut in 1992 and became an immediate hit. Its product line has blossomed beyond tea and now encompasses hundreds of products that include snacks, candy, coffee and alcohol. One of its most popular drinks is the Arnold Palmer, a half-tea, half-lemonade beverage based off the golf great's drink of choice.

But just as eye-catching as the design is the 99-cent price for its tall boy iced teas, is its cost, which should be adjusted to more than $2 according to US Bureau of Labor Statistics' price calculator. But that 1992 price is staying put.

"Our customers don't need another price increase," he told CNN International anchor Richard Quest in June. "We maintain that price to give customers a reason to buy us."

Manufacturing costs have risen everywhere, but Vultaggio credits actions "behind the scenes" that keep the tea's profit margins robust. "We've been able to do it by light-weighting the can, run the cans faster on the line, have more facilities in America so we get closer to market," he said.

The eye-catching design also helps maintain its market dominance, because AriZona doesn't advertise as much as competitors like Snapple. Rather, the brand relies on its creativity to grab customers' attention.

"We use packaging and a value story, then a great product inside," Vultaggio said. "The first time a person buys us is because of the package. And forever more, they're buying it because it tastes great."

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