The Case For Three-Tier
No, you read the title of this post correctly, The Case For Three-Tier. Disclaimer for those who are pregnant, may soon become pregnant, or suffer from a heart condition: you are about to read me make a case for the three-tier system and not in a “devil’s advocate” sort of way, but in a real “we actually need this” way.
There is a growing sentiment among consumers, and even a growing trend among statutory changes (like this one Tuesday in Washington state), against the 3-tier system. The behind-the-scenes warfare, as detailed here, between the members of the various tiers has only intensified as the clamoring for reform has grown. Most of you are probably aware that I led a charge for statutory reform in Texas earlier this year that would have allowed brewpubs like mine sell to distributors, which is currently prohibited.
So I come here today to once again remind us all of the importance of a truly independent distribution tier. The simple fact of the matter is that craft beer needs the middle tier for its continued existence. The distribution game is a difficult one, and in most cases requires scale in order to be profitable. Because of the scale required, it often takes big resources and big companies to be an effective distributor – something most craft breweries cannot be. If not for the requirement for an independent middle tier, there is little question the world’s mega brewers would vertically integrate distribution networks, and eventually crowd out craft brands. Niche distributorships may emerge, but their geographic reach would be limited (and many geographic areas would probably end up underserved or completely unserved).
Craft beer needs distributors. But our beer laws also need reform. These are not concepts in conflict with one another. As the fight for fairer beer laws in Texas continues, I’m proud to say that I’m in the process of meeting with distributors across the state to find common-ground solutions so that we can move forward. What I’ve found is that the distributors are not as unreasonable as we are led to believe, and they increasingly want craft beer in their portfolios. Now they want a way for us to work together without opening things up completely and allowing the world’s mega-brewers to re-establish the vertically integrated monopolies that flourished pre-prohibition.
The craft movement has a strong foothold and is here to stay. Let’ s not undermine the progress made thus far by calling for the complete abolition of 3-tier, let’s instead focus on making the right improvements to the system that doesn’t kill the craft movement in the process.