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The American Beer & Wine Distribution System

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The modern system of beer and wine distribution is an efficient three-tier system that provides consumers with immense choice, retailers with customized inventory, encourages innovation and competition in the marketplace and allows states to regulate where and how alcohol is sold, giving law enforcement effective tools to fight underage purchase and consumption.

Control of alcohol beverages and local beer and wine distribution has not always been so efficient and effective, causing alcohol to be the subject of two amendments to the U.S. Constitution.

[/container][gap size=”3.0em”][/vc_column_inner][/vc_row_inner][/vc_column][/vc_row][vc_row padding_top=”-50px” padding_bottom=”0px” border=”none” bg_image=”6679″ parallax=”true” no_margin=”true”][vc_column width=”1/1″ fade=”true” fade_animation=”in” fade_animation_offset=”45px”][container][gap size=”3.0em”][tab_nav type=”four-up” float=”none”][tab_nav_item active=”true” title=”PROHIBITION”][tab_nav_item title=”BIRTH OF A NEW DISTRIBUTION SYSTEM”][tab_nav_item title=”CURRENT CHALLENGES TO THE SYSTEM”][tab_nav_item title=”HOW DOES THIS AFFECT YOU?”][/tab_nav][tabs][tab active=”true”]In 1920, Congress enacted the 18th Amendment to the U.S. Constitution: the National Prohibition Act. However, as a result of the lack of enforcement of the Prohibition Act and the creation of an illegal industry, an increase in crime transpired. The crime rate soon skyrocketed to nearly twice that of the pre-prohibition period. It can be argued that prohibition destroyed legal jobs, created black-market violence, and diverted resources from enforcement of other laws.

In 1933, the 21st Amendment was ratified, repealing the failed experiment of Prohibition. While Prohibition did not end alcohol consumption, it dramatically changed the conditions under which it was sold and consumed. Section 2 of the Amendment gives states authority to regulate the production, importation, distribution, retail sale and consumption of alcohol beverages inside their borders.

Congress recognized that the importance of maintaining effective state alcohol regulation is critical. It allows states the flexibility to deal with local circumstances. A one-size-fits-all approach to alcohol regulation simply doesn’t work. People in North Carolina¬†probably feel very differently about alcohol than those in New York. The 21st Amendment was designed to reflect local thought on the level of regulation needed for alcohol.[/tab][tab]Federal and state lawmakers realized that Prohibition did not work, but they did not want a return of the promotion and sales patterns that characterized the pre-Prohibition era. Consequently, they put together a three-tier distribution system that utilizes distributors to help facilitate a balanced and orderly marketplace and to ensure local control of alcohol beverages. This system has worked well for more than 80 years, providing a level playing field for large and small producers and retailers and providing consumers with immense choice of product at a great value.[/tab][tab]In May 2005, the Supreme Court’s Granholm v. Heald decision ruled on the narrow issue of discrimination as it relates to wine sales. The plaintiffs, aided by the $45 billion wine industry, sought to overturn state alcohol distribution laws to allow out-of-state wineries to offer unregulated, door-step delivery of alcohol to consumers across the country. The defendants–the states and their regulatory agencies–sought to have their laws upheld in accordance with the 21st Amendment which gives states the right to regulate the sale and distribution of alcohol within their borders.

The Supreme Court landed somewhere in the middle. In a 5-4 decision, the justices decided on what ultimately was a compromise: states may prohibit wineries from shipping wines to the doorstep of their citizens; however, a state cannot grant in-state wineries the ability to ship while at the same time preventing out-of-state wineries from doing so. The Supreme Court upheld states’ rights to maintain a three-tier alcohol distribution system, calling it “unquestionably legitimate.”

Unfortunately this decision is being twisted by those that wish to see alcohol deregulated. Those that want alcohol available anytime, anywhere and to anyone are using the Granholm decision to misinform the public and convince federal judges and state legislators that the Supreme Court has rejected state-based alcohol regulation.[/tab][tab]The 18th and 21st Amendments to the U.S. Constitution reflect a very heated debate which resulted in a compromise that has worked well for over 80 years: States are given the right to regulate alcohol through their legislative and regulatory process. .

The strength of state alcohol regulation is the key to a safe and viable system of alcohol controland distribution.¬† Unlike some foreign countries, the United States is not plagued by an influx of “fake” alcohol coming into the marketplace. Serving in numerous roles and performing an array of tasks, beer and wine distributors serve as a critical link in an efficient system that allows smaller, more unique beers and wines a vehicle to market, provides consumers with the choice they desire at a great value and ensures a safe and orderly marketplace.[/tab][/tabs][/container][/vc_column][/vc_row]