The Three-Tier System, Product Diversity, and Consumer Access to Products

Part 4 or a 10-Part Series Examining the Three-Tier System of Alcohol Distribution

This is the fourth of a 10-part series examining the Three-Tier System of alcohol distribution in the United States. It is my intent to examine the details, history, impact, politics and alternatives to this uniquely American set of alcohol laws.

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Reducing product diversity at retail and curtailing consumers’ access to products is a feature of the three-tier system (TTS) of alcohol distribution—not a bug.

If we were to try to imagine an alcohol regulatory system that instead was designed to promote product diversity at retail and consumer access to products it would possess the following characteristics:

1. Licensed producers and importers would have direct access to consumers via direct sales and interstate shipment of products

2. Licensed retailers would have had direct access to consumers across the country via interstate shipment rights.

3. Retailers would have direct access to producers and importers who were not required to sell to wholesalers before their products were sold to retailers.

These three requirements for a consumer and product-friendly alcohol regulatory system are not in place in any state in the U.S.

[Three Tier System (def.): A state alochol regulatory system that requires producers/importers, wholesalers and retailers to be licensed separately and mandates that producers/importers may only arrive on a state’s retail shelves if htey first sell to a middleman wholesaler, who is then the only licensee that may legally sell products to the state’s retailers.]

Over the years a number of lies have been told about the utility of the TTS. The greatest lie, and not coincidentally the one told most often by the system’s most ardent supporters, is that the TTS is responsible for the increase in products and producers we have seen over the past three decades.