3-Tier System: Introduction

I feel lucky in that a lot of posts write themselves and I don’t have to try too much, except in researching things and drinking beer. The 3-Tier system, however, has been a 9-month long battle for me of how to talk about this complex, occasional divisive, topic. Initially I planned 1 post, which became 1 massive post, which is now a series of 5 posts in the following order (as posts are published I’ll update these links):

  1. Introduction and history (you are here)
  2. Breweries
  3. Distributors
  4. Retailers
  5. My Conclusions

Throughout all of this I will strive to remain impartial  and address both pros and cons of the system. I’ve made it my goal to publish all these posts this year, as they say there’s no time to start like the present so let’s start in the past.

Before prohibition, there was basically 1 tier of breweries that owned the distribution network as well as the places where their beer was sold. It was felt at the time that this was bad for customers due to price inflation, increased consumption, and lack of product diversity. During prohibition, you really saw the start of what would become the 3-tiers, the brewer, the smuggler, and the speakeasy. Though there are good odds these were still all run by the same mob.

At the end of prohibition the U.S. Congress passed the 21st amendment which, according to archives.gov, says the following:

AMENDMENT XXI

Passed by Congress February 20, 1933. Ratified December 5, 1933.

Section 1.
The eighteenth article of amendment to the Constitution of the United States is hereby repealed.

Section 2.
The transportation or importation into any State, Territory, or Possession of the United States for delivery or use therein of intoxicating liquors, in violation of the laws thereof, is hereby prohibited.

Section 3.
This article shall be inoperative unless it shall have been ratified as an amendment to the Constitution by conventions in the several States, as provided in the Constitution, within seven years from the date of the submission hereof to the States by the Congress.

The bolding of Section 2 was my doing as it’s the part that is relevant to our current discussion. Basically, it says that the individual states are fully in control of liquor laws within their state. Some states decided to continue prohibition (Mississippi until 1966) in full while others (like Kentucky) took a “local option” and passed some of these controls over to counties, resulting in wet and dry counties.

Over the years, different states have interpreted this in different ways. In general, though most states have established 3 tiers representing creation, distribution, and sale to customers. Where distributors are licensed by the state to engage in the wholesale distribution of alcohol.

Alternative to the license system was a government monopoly on the distribution and often the sale of alcohol. Some states, like North Carolina and 17 other states, opted to create an Alcoholic Beverage Comission (ABC). I’m familiar with North Carolina from vacationing there; so I can quickly describe it that beer & wine are available in stores and gas stations but hard liquor must be bought at ABC stores.

To finish off this post on the introduction to the 3-tier system I have a very quick summary of all of the above. In general there should be a separation of brewer and retailer with a wholesaler distributor bridging that gap.

Keep a watch for part two where I will (hopefully) interview some local brewers about their role in, and thoughts on, the 3-tier system.

Oh, and any brewers, stores, or distributors interesting in participating feel free to contact me!

16 thoughts on “3-Tier System: Introduction”

    1. I think the most enlightening part for many folks will be distribution. Breweries and stores are obvious parts of the puzzle, but distributors are the gears behind the scenes.

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  1. Always a fun topic and certainly one that’s gaining a bit of traction as craft beer spikes in interest. Wisconsin, Florida, South Carolina and Texas are a few states I can think of that have had or currently have discussions on some sort of legislation that impedes (to some extent) on the system.

    As craft brewers grow and start pushing for their own slice of the political pie, it’s interesting how the big boys at SABMiller and AB InBev aren’t afraid to throw their elbows around.

    Looking forward to hearing from brewers themselves! Great idea.

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