The Three-Tier System
America’s independent beer distributors are a critical link in a three-tier distribution system. Distributors are regulated by the states and provide a tremendous variety of beer brands and styles to licensed retailers at a great value while protecting the public. The three-tier system is made up of brewers and importers, distributors and retailers.
Benefits of the Three-Tier System
Healthy Competition and a Robust Marketplace
Beer distributors source beer from a wide variety of importers and manufacturers. By working with numerous brewers, distributors provide a vehicle to market for the largest multinational beer brands to start-up craft brewers. Because of this system, you can order a California craft beer off a menu in Illinois; enjoy a Vermont brew in a Tennessee restaurant; and see a tap handle from Pennsylvania in a Texas bar.
The three-tier system provides the infrastructure, capital and personnel small brewers need to reach a wide network of retailers. Distributors’ infrastructure includes state-of-the-art warehouses and fleets of temperature-controlled trucks and vehicles that preserve these perishable products. Distributor personnel include not only employees that handle warehousing, transporting and delivering all types of beer to local retailers, but also sales and merchandising professionals who help promote each label of beer they sell. Distributors deliver customized inventory based on the requirements of each individual retailer in their local market.
Tremendous Variety to Consumers
Because independent beer distributors help get new brands to market, consumers benefit by having the choice between the largest international brands and the smallest local brews all on the same store shelf, restaurant list and bar tap. Today, American consumers can choose from a wide variety of beer brands and labels, ranging from lambics and lagers to porters and pale ales. There is a flavor and style for every palate!
Beer distributors provide a clear chain of custody in the sale of beer. America’s independent beer distributors are licensed by both the state and federal governments. Distributors source fresh beer only from federally-registered brewers and importers and sell it only to state-licensed retailers including restaurants and convenience stores. This system helps to ensure that retailers hold the appropriate license, do not sell to those under the legal drinking age and comply with local alcohol beverage laws.
The system also ensures that beer is traceable; so if there were a suspected problem with a product, distributors could act swiftly to track the identified product and pull it from the marketplace. This regulated distribution system also helps protect American consumers from counterfeit and poisonous alcohol that is prevalent in many other countries that lack an effective regulatory structure. American consumers enjoy unequaled safety thanks to the three-tier alcohol distribution system.
The same controls that provide accountability in beer sales also ensure states can efficiently collect taxes on alcohol products. Because distributors are able to monitor the beer from the time it leaves the brewery until it arrives at a licensed retail outlet, they are often best equipped to collect state taxes and help the state enforce alcohol laws.
For this reason, many states find it more efficient to collect taxes from a limited number of federal- and state-licensed beer distributors than from the hundreds or thousands of retail establishments that sell alcohol products.
Value and Efficiency for Retailers
By storing perishable products, providing access to a diverse selection of brands at various price points, and hiring local citizens dedicated to helping sell beer and promote local businesses, America’s more than 3,000 licensed beer distributors provide tremendous value and efficiency to America’s more than 600,000 licensed alcohol retailers. Distributor services—like monitoring retailer shelves, taps and keg lines to ensure consumers are receiving the freshest product—reduce retailer operating costs and translate into dramatic annual savings for retail outlets across the country.
Distributors also assist retailers through point-of-sale advertising, merchandising and stocking. Additionally, beer distributors help ensure that bars, restaurants and stores that sell beer do so responsibly and only to those of legal drinking age by routinely providing materials that discourage underage sales. These materials—like signs, posters or stickers—are often seen on cooler doors and at cash registers when consumers purchase licensed beverages.