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Has the three-tier system become archaic?

28 Dec

For many, the ability to go to the local grocery store or corner store and pick up a six-pack of their favorite craft beer is merely a matter of convenience. No thought is given to how that beer got there or who put it there. It is just there, ready to be picked up, purchased and consumed. But, the story of how craft beer gets from brewer to grocer is fascinating and, at times, frustrating.

As America awoke from the long, dark nightmare that was Prohibition, the federal government left the regulation of alcohol to the states. Lawmakers wanted a way to prevent the proliferation of “tied houses” or saloons that served beer from only one brewery. Before prohibition, it was common for breweries to provide loans to bar owners for furniture and bar equipment under the stipulation that the bar only serve their beer. Along with the loan, breweries applied pressure to the barkeep to sell more and more beer, often leading to overconsumption and drunkenness of patrons. Add in the specter of the mob-controlled distribution and speakeasy networks during Prohibition and it was apparent a change had to be made.

These fears led to the adoption of what is known as the “three-tier system.” This set of laws separate brewers from retailers through a middle-man or distributor. In essence, the system requires brewers to sell their beer to a distributor who then sells the beer to retailers like bars, restaurants and stores. Since the federal government left the states to regulate alcohol as they saw fit, the system is not consistent across the nation. But, for the most part, the system prohibits breweries from owning distribution firms or selling directly to retailers. In Florida, breweries are allowed to operate tap rooms where they are allowed to sell their own beer to guests on a limited basis.

But, in an industry overflowing with choices, brewers can find it difficult to get shelf space or tap placements if their beer is sub-par. For this reason, many distributors recommend breweries fine tune their beers in their tap room before releasing them to distribution.

“A tap room’s a beautiful thing,” said David Rigdon of Jacksonville distributor Champion Brands to a group of brewery owners at the recent Florida Brewers Conference. “Use your taproom to develop your beers. At the end of the day, though, it’s the old push pull. We push your brands, but buyers have to pull them.”

The system is not without its critics. Some breweries, particularly smaller ones, contend that self-distribution would allow them to ensure their beers stay on tap thereby helping both the brewery and retailer make more sales. They cite the example of a bar that blows a tap of their beer on a Friday evening. If there are no self-distribution laws and only the three-tier system, the bar must wait until Monday when the distributor is open for a new keg. With self-distribution, the brewery could deliver a keg directly.

As is common among older alcohol laws, a close look at the system is needed to fully understand what still makes sense. And, as we all know, the wheels of government turn slowly. But, for now, raise a glass of your favorite brew to the fine men and women employed by your local distributors for they truly do deliver happiness.

 

 

But, some brewers, particularly small and local companies, are discovering that the three-tier system is holding them back.

 

 

 

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Posted by on December 28, 2017 in Beer, Beer Education

 

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