4 ms·

The three-tier system is absolutely awful in a lot of states for smaller breweries. It has been used to severely reduce their ability to sell on-site for off-si

The three-tier system is absolutely awful in a lot of states for smaller breweries. It has been used to severely reduce their ability to sell on-site for off-site consumption, which is key for smaller breweries. Many states set the revenue/volume cap too low before you have to cut off on-site sales of off-site consumption for you to not take a significant hit to your profit swapping to a distributor. It also makes it very easy for the bigger groups like AB Inbev to play games with distributors around pushing enough volume of their products if they want to get allocations of more in-demand bottles like Goose Island's Bourbon County Brand Stout. I did not think I would ever see someone seriously arguing that the three-tier system for beer is a good thing for smaller players.

kmeisthax 3y ago
The thing with the three-tier system is that it only partially disaggregates the system. Market consolidation has a certain gravity to it: once one market is consolidated, they start stripping the margins off their suppliers and increasing prices for their customers. The only defense against this is to consolidate yourself to maximize your negotiating leverage. If wholesalers and retailers were horizontally disintegrated then it'd be a better system. This is also why businesses are furiously and unanimously anti-union. Labor is their biggest cost and they get ahead if they can keep labor fragmented while they consolidate.
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