America’s
Beer Distributors:
Celebrating 75 years of effective, state-based alcohol regulation
Why America’s state-based beer distribution system works
F
or 75 years, the American three-tier system
(composed of brewers, distributors and retailers) has
proven to be the best way – and the only effective and safe
way – to control alcohol beverages and protect consumers.
This system has four primary goals:
1. To facilitate state and local control
2. To generate tax revenues that can be collected
efficiently from the industry
3. To promote temperance, moderation and an orderly
marketplace
4. To avoid the overly aggressive marketing and sales
practices of the pre-Prohibition era.
Today, America’s beer distributors operate under
federal, state and local regulations concerning when,
where, to whom and how their products are sold. Few
American industries are more highly regulated than the
beer industry.
Regulation
America’s 2,750 beer distributors are licensed by both
the state and federal governments. They receive alcohol
beverages only from licensed importers or brewers, and they
sell those beverages only to licensed retailers. This structure
creates transparency and accountability and provides a
balance between competition and effective regulation.
Alcohol is not like chewing gum or toothpaste and is
not regulated the same way as these and other consumer
products. Alcohol is the subject of two constitutional
amendments: the 18th Amendment and the 21st
Amendment. Alcohol beverages are unique and can have
consequences if abused. As society addresses problems like
underage drinking and drunk driving, the importance of
maintaining effective alcohol regulation is critical.
People in New York feel very differently about alcohol
than those in Utah, and as the U.S. witnessed during
Prohibition, a one-size-fits-all approach to alcohol
regulation does not work. The 21st Amendment, which
repealed Prohibition and established today’s modern,
three-tier system, was also designed to reflect local thought
on the level of regulation needed for alcohol. As a result,
state-based regulation provides each state the flexibility to
deal with local needs, demands and circumstances.
While laws governing alcohol regulation differ from
state to state, all of America’s beer distributors work
hand-in-hand with state regulators to advance each state’s
individual approaches to regulation.
Consumer Protection
The state-based, three-tier system of alcohol distribution
works to protect American consumers from the counterfeit
and poisonous alcohol that is prevalent in many other
countries. You don’t see alarming headlines like these
about American alcohol:
• 40,000 Russians die annually of poisonous alcohol
• Nearly 60% of liquor found in Chinese cities is fake
• 125 Die in India after drinking illicit liquor
The U.S. has the safest alcohol laws in the world.
American consumers enjoy unequaled safety thanks to
state-based “chain of custody” laws which states must
keep strong in order to protect consumers.
Transparency
While the system works to prevent tainted alcohol from
entering the supply chain, if tainted alcohol were to be
discovered in the U.S., the current regulated distribution
system would be able to quickly and efficiently react
and prevent the product from reaching consumers.
Only federally-registered manufacturers can produce or
ship beer into the U.S., and they may only provide their
products to a distributor that is licensed by both the state
and the federal government. The distributors are then
required to sell only to state-licensed retailers who then
sell the product only to consumers of legal drinking age.
This system of alcohol distribution ensures products are
transparent in the supply chain from the day they are
bottled or canned to the day they are purchased by a
consumer.
Transparency in “chain of custody” laws makes it easier
to enforce state regulations and local ordinances, and
the transparent beer distribution system also regulates
retail sales - ensuring that retailers hold the appropriate
license, do not sell to those under the legal drinking age,
pay state and local taxes and generally comply with state
and local alcohol beverage laws.
state taxes. For this reason, many states find it easier to
collect taxes from a limited number of federally licensed
beer distributors than the hundreds or thousands of
retail establishments in their state that sell alcohol
products.
Accountability
With nearly 13,000 labels of beer available across
the U.S. from brewers large and small, domestic and
international, America’s distribution system gives retailers
and consumers access to unparalleled choice and variety.
No other country in the world offers as many styles and
flavors.
Beer distributors are the vehicle to market for all brands
of beer, providing equal access to market for large,
multinational brands and small, local craft brews. This
helps ensure a level playing field for all brewers.
Beer distributors help small brewers grow and compete
by maximizing their sales reach. Distributors unlock the
market for startup and small beer brands, providing the
infrastructure small brewers need to reach a wide network
of retailers. Consumers benefit by having the choice
between the largest international brands and the smallest
local brands, all on the same store shelf, restaurant list
and bar tap. And because of the economic efficiencies of
the distribution system, retailers are able to offer a large
selection of choices at a great value.
The same regulations that provide accountability in
beer sales also ensure states can efficiently collect taxes
on alcohol products. Because they retain the ability to
monitor the sale of the products from the time the beer
leaves the brewery until it arrives at a licensed retail
outlet, distributors are often best equipped to collect
Most Variety In The World
Keeping The Perishable Product Safe And Fresh
Beer is a perishable product, and distributors
preserve beer by utilizing state-of-the-art, temperaturecontrolled warehouses and transportation systems. They
deliver customized inventory based on requirements
from individual retailers including restaurants, bars and
neighborhood stores. After delivery, distributors monitor
retailer shelves, taps and keg lines to ensure consumers
are receiving the freshest product. While providing
choice and value to retailers and consumers, distributors
work simultaneously with state regulators to ensure
accountability of these unique products and an orderly
marketplace.
Economic Contribution
Beer distributors across the country provide rewarding
jobs to more than 91,000 hard-working men and women
who make solid wages and receive great benefits
including company-provided healthcare.
Distributors pay employees more than $4.9 billion
collectively in wages and benefits. The overall economic
contribution from America’s beer distributors is a whopping
$11.6 billion. Every dollar spent on beer distribution adds
$1.50 in economic activity – generating 30 cents in federal
tax revenue and 18 cents in state and local tax revenue.1
1
Guerrilla Economics, LLC
The beer industry as a whole, which includes brewers,
distributors and licensed retailers, is a major contributor to
the U.S. economy. Directly and indirectly, the beer industry
employs approximately 1.78 million Americans, providing
them with $55 billion in wages and benefits. The industry
provides $36 billion in business, personal and consumption
taxes.
Please visit www.beerservesamerica.org for specific
economic contributions from every state and congressional
district in the U.S.
Responsibility/Community Involvement
Beer distributors are active in their communities, working
tirelessly to sponsor programs that combat underage
consumption and fight drunk driving. Although they are
small businesses, the impact of their civic programs is farreaching. Initiatives such as free taxi rides, server training
and tips, inspirational speaker presentations and educational
materials are just some of the many ways that beer
distributors work to keep citizens in their local communities
safe and healthy. Additionally, distributors frequently
support countless charities and philanthropic causes.
“STOP” Underage Drinking Act
America’s Beer Distributors partnered
with several like-minded and nontraditional
organizations to support the “Sober Truth
on Preventing (STOP) Underage Drinking
Act,” which addresses the serious health
and safety issues involved with underage
drinking. The STOP Act specifically provides
the necessary tools at the federal, state
and local levels to help prevent alcohol
consumption by those who are not of legal
drinking age.
Future of State-Based Alcohol
Regulation
W
hile America’s state-based, three-tier distribution
system provides consumers with unparalleled choice,
variety and safety, a number of legal challenges and
threats to the system’s integrity are ongoing in several
states. Special economic interests including large, big
box retailers a small number of alcohol manufactures are
seeking to deregulate alcohol through litigation. The result
may be a reduction in a state’s ability to control alcohol
effectively and a reduction in selection, choice and variety
for consumers. If non-elected judges rule against the
legitimacy of the three-tier system, these decisions would
give big-box, mega-retailers even greater competitive
advantages against small retailers.
When independent retailers suffer at the hands of
huge corporations, consumers are impacted by the loss
of choice, variety and safety. States will also be impacted
by the high costs of transportation, logistics, refrigerated
storage, delivery and constant maintenance of a perishable
product like beer.
National Beer Wholesalers Association
1101 King Street, Suite 600
Alexandria, Virginia 22314-2944
703-683-4300 • FAX: 703-683-8965
Toll Free: 800-300-6417
www.nbwa.org