Manufacturer tier makes the beer

Manufacturer Tier

When craft beer supporters see a legal problem that is keeping their local brewers down, they immediately point their finger at the three-tier system. Too often, it is seen as the source of everything keeping craft beer down in America. To be fair, the term is almost always used by those with an interest in the status quo as a justification for a current regulation.

The term has become overused – not every alcohol regulation in America is rooted in three-tier. We have some issues with the current Alabama law, but it is not with the three-tier system. Despite what some people assume, the Alabama Brewers Guild supports the three-tier system.

So what is the three-tier system?


Distribution Tier

The three-tier system serves one purpose and only one purpose: to keep retailers (bars, stores, and restaurants) independent and free from the influence of large brewers and wineries with deep pockets.

The three tiers are producers, distributors, and retailers. In most circumstances, the three-tier system says that the retailer cannot buy beer directly from the brewery. Instead, the retailer must buy beer from a licensed distributor, who buys beer from the brewery and sells to the retailer.

There is no customer tier in the three-tier system. This regulatory scheme is about the relationship between producers and retailers. As long as the producer isn’t self-distributing alcohol to a retailer, the three-tier system is working (although most states allow some self-distribution for small wineries and breweries).

Direct sales in the three-tier system


Retail Tier

A direct sale is when a producer (or distributor) sells an alcoholic beverage directly to a customer. This usually must happen at the licensed facility. Every state, including Alabama, has at least some allowance for direct sales. Wineries in Alabama have been allowed unlimited direct sales for decades. Breweries in Alabama, however, can sell beer by the glass but not for customers to take home.

The Alabama Brewers Guild supports giving brewers the same privileges that wineries have enjoyed for decades, and we do not believe direct sales are inconsistent with the three-tier system.

A world without three-tier

[pullquote]“It’s not uncommon for the big brewers to offer more money, rebates or other incentives for exclusive access to 80% or even 100% of pub taps, making it hard for independent brewers to get a fair go”
-Tom Godfrey of CHOICE (Australia)[/pullquote]

For consumers who value a wide variety of choice in their beer, retailer independence is important.

Recent news out of Australia show how the market might change without a three-tier system in place. Large producers aggressively elbow into a wider market share, pushing out small and independent brands with financial incentives and clever brand confusion.

Support retailer independence

Independent craft brewers in Alabama are growing because retailers are responding to their customers. Craft beer fans should be wary of a world where large breweries with deep pockets are allowed to own or financially influence pubs and stores. Your favorite breweries are legally allowed to fairly compete for market access and the consumer’s dollar.

Future realities may change the situation, but for now we can thank the three-tier system for independent retailers.