Three-tier

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The Three-tier system of alcohol distribution is the system for distributing alcoholic beverages set up in the United States after the repeal of Prohibition. The three tiers are producers, distributors, and retailers. The basic premise of the system is that the producer must sell to the distributor who must then sell to the retailer (and only retailers may sell to consumers). Producers include brewers, wine makers, distillers and importers.

Some states chose to become alcoholic beverage control jurisdictions after Prohibition - as discussed below these states do not always fit so neatly into the "three-tier" model.

Exceptions and regulations

States have various exceptions to this rule, the most prevalent one being the case of a brewpub, which is simultaneously a producer and retailer, and has no requirement to sell to a distributor. Some states allow an entity to have a part in two of the tiers, letting small breweries act as their own distributor, for example. Many states permit wineries to sell bottles of wine on-site to customers, and some states, such as Oregon, permit intrastate shipments of wine directly from the producer to the customer.^{[citation needed]}

In those jurisdictions that are not alcoholic beverage control states (discussed below), both liquor stores and licensed establishments are considered "retailers" for all intents and purposes, and may buy their product directly from distributors.

Usually producers will give a distributor exclusive rights to market their product within a geographical area, so that there will not, for example, be two distributors of Anheuser-Busch products competing against each other.

Rules also vary according to what kind of relationships each of the tiers can enter in to with the other two tiers. So for example a producer may not be allowed to give promotional items or services to a retailer. A beer distributor might be responsible for setting up and maintaining draft lines in a restaurant, or may be legally prohibited from doing so, depending on the state.

Also, several states are alcoholic beverage control states - in any of these jurisdictions state governments maintain a monopoly on the distribution tier of the system (at least for distilled beverages). Some (such as Utah and Pennsylvania) monopolize the distribution and retail tiers. Those that maintain monopolies over the distribution system only (such as Michigan) could still be said to have a three-tier system - in such states producers sell to the distributor (in these cases, the state as opposed to a private operator) who in turn sells to private retail outlets.

See also

• Granholm v. Heald - Supreme Court of the United States case involving state's right and the three-tier distribution system.

References

External links

• National Beer Wholesalers Association: The American Beer Distribution System
• Bye-Bye Bell's Chicago Reader article about beer distribution laws