[The Story of Arizona Iced Tea

Road to the Top

In 1971, two friends, John Ferrolito and Don Vultaggio, bought a used Werksvagen van and started a discount beer and soda delivery company. At first, both men worked part time in their spare time, but what seemed like an unattractive business became so successful that the friends soon bought more vans and began to devote themselves to the business full time. The delivery partners soon added their own brands to the delivery business, focusing on producing flavored mineral spirits and American-style lagers called Midnight Dragon and Crazy Horse. The company\’s greatest success, however, came in the 1990s. Inspired by the success of Snapple, which produced packaged juices and teas, Ferrolito and Vultaggio introduced a packaged tea, Arizona Tea.

Issue

In 1998, Ferrolito and Vultaggio signed an agreement not to sell their interest in the company to outside parties when Ferrolito moved to Florida. However, this agreement became the crux of a dispute in 2005 that culminated in litigation in 2012: as early as 2005, Ferrolito was already trying to get multinational companies such as Nestlé and Coca-Cola to sell their holdings and was seeking to dissolve Vultaggio\’s Beverage Marketing, Inc. It had even filed a lawsuit seeking to dissolve Beverage Marketing, a company run by Vultaggio. In 2012, however, the court ruled that Beverage Marketing would not be dissolved and would have the exclusive right to purchase Ferrolito\’s holdings. But that led to another lawsuit, this time over the fair value of the company. While Vultaggio\’s lawyers valued the company at $430 million, Ferrolito valued it at $3 billion.

What next?

In 2014, the court ordered Vultaggio to pay $1 billion if it wanted to buy out Ferrolito\’s holdings. Thus, with regard to the price of the company, the court could be said to have determined a price in between the two proposals. The court also decided to take into account Beverage Marketing\’s ability to pay and adjust the payment terms accordingly.
Even a protracted dispute between former friends did not hinder Arizona\’s growth. Arizona now controls about one-third of the U.S. beverage market, making it a more successful service than, for example, Lipton or Coca-Cola
.