AMERICAN BEER DISTRIBUTION

More Relevant Today Than Ever 

From America’s Birth, beer has been an integral part of the culture and the nation’s economy. But there was also a dark time in our nation’s beer history – the failed experiment of Prohibition. Prohibition destroyed legal jobs, gave rise to organized crime and turned ordinary citizens into common criminals. 

Following the repeal of Prohibition with the 21st Amendment, a state-based three-tier system of alcohol distribution was established. Why three tiers? There are lots of reasons, including that before Prohibition suppliers held unfettered ownership stakes in retailers (known as “tied houses”) leading to rampant anti-competitive business practices and marketing tactics aimed at inducing excessive consumption. To remedy these problems, the 21st Amendment gave the states sole authority to regulate the distribution of alcohol within their borders, and the states responded by requiring that each tier be independent. States who enacted this system looked to the distributor tier as the physically present, locally owned and regulated buffer between distant mega-manufacturers and licensed retailers.

The system provides safeguards in the way beer is distributed and sold. It ensures that alcohol is not sold to minors, state and local laws are observed and consumers are provided with a wide variety of product choice at reasonable prices. 

Today, the beer industry is one of the most regulated industries in the nation. Each day distributors work to make certain beer taxes are reliably collected, and their products are consumed legally and responsibly.