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Three-Tier Distribution System Both Good and Bad for Brewers

Tiers of bureaucracy clog up the brewing world

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For many, the ability to go tothe local grocery or corner store and pick up a six-pack of their favorite craft beer is a matter of convenience. No thought is given to how that beer got there or who put it there. It’s just there, ready to be picked up, bought and consumed. 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 individual states. Lawmakers wanted to prevent the proliferation of “tied houses” or saloons that served beer from only one brewery. Before Prohibition, breweries commonly provided loans to bar owners for furniture and equipment under the stipulation that the bar serve only their beer. Along with the loan, breweries pressured barkeeps to sell more and more beer, often leading to overconsumption and drunkenness. Add in the specter of mob-controlled distribution and speakeasy networks during Prohibition and it was clear a change had to come.

These fears led to the adoption of what’s known as the “three-tier system.” These laws separate brewers from retailers through a middleman or distributor. The system requires brewers to sell their product to a distributor who then sells the beer to bars, restaurants and stores. Since the federal government left the states to regulate alcohol, it’s not consistent across the nation. For the most part, the system keeps breweries from owning distribution firms or selling directly to retailers. In Florida, breweries are allowed to operate taprooms and sell their own beer on a limited basis.

In an industry overflowing with choices, brewers can find it tough to get shelf space or tap placements if their beer’s sub-par. So many distributors recommend breweries fine-tune beers in the taproom before distributing them.

“A taproom’s a beautiful thing,” said David Rigdon of area distributor Champion Brands 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 does have critics. Some breweries, chiefly smaller ones, say 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 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. Some brewers, notably small and local companies, find the three-tier system holds them back. We all know the wheels of government turn slowly, so for now, raise a glass of your favorite brew to the fine men and women employed by local distributors, for they truly do deliver happiness.

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