Alcohol-oriented beverage sales are a highly regulated system in all 50 states. These systems are known as both three-tier systems and control system models employed in 18 administrative states / jurisdictions. Basically, a three-tier system is [very easy]. Manufacturers provide alcoholic products to wholesalers / distributors, who distribute these products to retailers and ultimately consumers participate in the mix.
Why should the government complicate relatively simple distribution issues? Especially talking about alcohol and wine. Consumers generally lose when there are few choices. All industries have some form of sophistication and specificity that consumers don't understand, especially when there is no added value in the regulatory bog. For wine enthusiasts [and all alcoholic beverage consumers], a complex system for delivering wine to consumers is helpful. The logic is a bit confusing, even if not completely contradictory. A three-tier delivery system is a government mandated system that must be followed to deliver alcoholic beverages to consumers while protecting vulnerable consumers. Unfortunately, this system has not been unified by state in relation to laws governing wine, spirits and beer, and is a real motivation for consumers to discuss and understand.
This classification of state law was mandated by the federal government in 1933 and the system was entrusted to the state for implementation and management. Basically, the three-tier distribution system mandates a system that alcohol wine, spirits and beer producers must adopt to deliver products to consumers. Not surprisingly, there are many exceptions to the three-tier system, which are based on individual state regulations. Nevertheless, wine-specific systems require that producers sell wine only to wholesalers, wholesalers sell to retailers, and only retailers sell to consumers. One obvious exception is consumer direct wine sales at the winery or on-site winery sales. Clearly, markup is added to product costs at every level of the distribution process. This politically mandated control system increases product costs by more than 30%.
If you are a Utah consumer reading this, you are a criminal if you bring back your favorite wine case from California. Two bottles are your limit! Technically, the three-tier system is not entirely about tax collection, and mechanisms are already in place to ensure that the government [state and federal] is taxed on alcohol products that are produced and sold.
In general, 32 states have private companies as distributors, and 18 states employ some or all of the “controlled distribution model” in which states own distribution for retail sales. Washington and Pennsylvania are such states.
In general, state governments allow or allow private companies to be the only distributors in the state or province. Even in a state with multiple distributors, those distributors & territories are protected by state laws established by the state government. Imagine if a state can approve / approve only one gasoline distributor for sale in the state to explain the harmful effects that such a system can have. Isn't it monopoly?
The questions to ask are: How did you get into this complex system of delivering wine [and beer and spirits] to consumers? A three-tier system does not pay taxes to the state and the federal government. The tax collection was decided long ago. The history of taxes on alcohol dates back to 1791, when Alexander Hamilton proposed an excise tax to help finance the federal government. Ordinary people felt that this "tax" was overly targeting citizens. Alcoholic beverages were a classic part of life and were considered part of the social structure, similar to putting a strain on the air they breathed. So finally the Whiskey Rebellion was born in Pennsylvania. However, excise tax remains to this day.
This was the passage of the 21st Amendment, which gave individual states the right to control most aspects of the distribution of alcoholic beverages [beer, wine, spirits] and was the abolition of the 18th Amendment. Depending on preference, the two goals of the three-tier system were: The state was interested in protecting citizens from excessive consumption, but wanted to promote sales of tax revenues. It might even have been a way to offer franchises to some companies. In any case, this evolved into a three-tier distribution system in 1933.
NABCA represents a control state system [similar to a three-tier system, but a country-owned distribution system] and promotes the benefits of a three-tier system / control state system.
- Each regulatory layer in the system is responsible for ensuring that the law is enforced. Self-regulation.
- Economic benefits-"The impact of taxation on society" supports government programs.
- Public health benefits-protect the public from contaminated alcohol.
- Commercial Benefit-Manufacturers have equal access to the market, increasing consumer choice.
Threats to three-tier systems / controlled state systems are brought about in the form of deregulation, gaining consumer voice and support. In most cases, industry leaders from major manufacturers want to maintain a three-tier system for obvious reasons. Recall that in the late 1970s, airline regulations were relaxed and the US airline industry was expected to collapse. I didn't do that.
Outside the three-tier system, there are other industry distributor networks with voluntary / optional participation of customers. These are distributors that offer services at competitive rates. The three-tier system is based solely on government orders at the state level. Fairly, the industry generally promotes the following setpoints: moderation encouragement, government tax revenue generation, aggressive marketing avoidance / monitoring by producers and sales practices, and alcoholic beverage state and local Promotion of management.
From a consumer perspective, there may be a problem with a system installed 83 years ago.
- There is more than 30% cost [wine] added to the product. It is up to the consumer and producer to determine the monetary value of these additional costs for the product.
- There is a tendency to promote state monopoly practices. Producers have no choice to negotiate with third parties for the distribution of their products. Even if it costs extra. What will producers use if there is no real competition? Certainly, small producers cannot compete with big shots when trying to work with distributors.
- Currently, the three-tier system is a collection of distribution companies.
- Distributors promote brands based on the revenue from product sales, so producers [small wineries] cannot compete in retailer-level shelf space.
- For small producers that produce limited wine [variety], the cost increases are disproportionately high.
- Large distributors can direct distribution periods to small producers.
- In the macro market sense, a three-tier distribution system may not be competitive for US producers. One size does not fit all.
- In some cases, a three-tier distribution system does not allow small wine producers to access the market [local or national]. As a fact of the distribution channel, it may be financially impractical for distributors to store, sell, deliver, and manage shelves of small-scale wine. Even introducing new wines with limited marketing budgets can be prohibitive.
Note: Beer is one of the alcoholic beverages with few rule exceptions. With a few exceptions, retail sales are only made through distributors. But most notable is the “brew pub”. This is defined as a facility that brews and sells its own beer.
When discussing the distribution of each type of alcohol product, stick to wine to avoid getting bogged down. Wine distribution deviates significantly from the general rules for distribution of three-tier systems for many reasons and varies from state to state. The wine distribution options are: There are significant differences between states.
- Direct delivery to consumers [DtC]
- On-site sales [at the winery]
As simple as the concept of selling wine, there are many law firms that help wineries navigate a number of complex regulations that are specific to the sale of each state and even cities and counties within the state.
With other channel changes and expansions, the three-tier system will be adjusted slightly each year as the market emerges and the industry changes. Still, a three-tier system is larger than the combination of all other channels. The wine industry [especially the United States and California] has changed significantly as more wineries have been launched and vineyards / wineries have become tourist destinations. For example, Robert Mondavi in the late 1960s had a vision and imagination that appealed to the Northern California wine country itself. This one event helped expand the winery distribution channel within the company through the sale of winery tasting rooms and wine clubs.
The craft beer business started with recovery and the general public responded. There are now pubs and venues that drink 100 beers in one place, and consumers can purchase takeaway containers for their favorite beers [called growers-64oz].
Direct to consumers-wine
This is a growing segment of the wine industry, possibly coming from four sources: consumer visits to wineries, organized wine tasting events, recommendations from friends, and restaurant experiences.
Even if you find a favorite out-of-state wine, that doesn't mean you're going online, joining a winery wine club, or calling a winery to send a case. Availability should be determined by state law, the amount of wine the winery produces, the licenses of the accepting state and winery, and even general carrier agreements.
Ship shipments of DtC [Direct to Consumer] wine increased 15.5% in 2014, according to Ship Compliant and Wines and Vines Analytics reports. This is equivalent to 3.95 million cases of wine. Adding some perspectives, Gallo has generated more than 80 million cases for consumption in the United States. The average price of wine bottles shipped directly to consumers was $ 38.40. A relatively expensive wine.
In 2014, 60% of direct consumer [DtC] wine shipments were directed to five states. California, Texas, New York, Florida, Illinois. Also, it seems that the DtC shipment simplification due to the new state law amendment in 2014 was a welcome change for consumers. In Montana, these changes resulted in a 245% increase in DtC sales and a corresponding 61% increase in North Dakota.
In summary, 43 states are allowed to ship wine to states, and 7 states are not allowed. The states that do not allow DtC shipments are Alabama, Delaware, Kentucky, Mississippi, Oklahoma, Pennsylvania, South Dakota [until 2016], and Utah.
As mentioned earlier, all states use either a three-tier distribution system or a control system [these operate like a three-tier system, but are owned and operated by individual states]. In short, all states manage some form of wine sales to consumers. The exception to these rules is that consumers can purchase wine directly from the producer in the DtC shipping state. However, a good equalizer is the shipping cost given to consumers that can be significant depending on the amount purchased. For DtC shipments, it's like paying to a distributor or paying to a delivery company.
Even California is the preferred child of DtC shipping and requires a three-tier distributor to bring wine from outside the state winery to California.
As Wine Folly reported, only 17% of US wineries are distributed throughout the United States. Some wineries are too small to be economically viable for distributors to carry brands, wineries cannot create enough labels to make them attractive to distributors, wine prices are too low, and / or not Corresponding bulk sales, or distributors who are sufficient, want many discounts to make a profit at the winery. In all these cases, a direct consumer model is an excellent alternative.
Self-distribution refers to the ability of a winery to function as a wholesaler by selling directly to retail and restaurant companies.
The 14 states allow winery self-distribution, but it is not an easy process. Postal, license, application, report, bond avalanche to pay excise tax; these all vary from state to state. Interestingly, California allows self-distribution of wineries in the state. Many California wineries have sales staff who sell wine to restaurants and retailers.
As with the three-tier system, self-distribution is defined by various rules established by each state that allow wineries to self-distribute. This is illustrated with two examples. Arizona allows the self-distribution of wineries that produce less than 20,000 gallons of wine. In Illinois, out-of-state wineries that produce less than 25,000 gallons per year may be self-distributed. However, the Self-Distribute exemption allows you to sell up to 5,000 gallons of wine annually to retailers. This shows the complexity of distribution options in different situations.
In conclusion, there are about 10 states that do not allow shipping to consumers. In fact, if you are a Utah resident and bought a wine case while visiting a winery in Sonoma, California, taking that wine back to your home in Utah could be a felony. In some other states, the winery must purchase a permit each year from the state to ship to you.
On the premises
This approach doesn't need to be explained much. However, he purchases a few bottles of wine, goes to the hotel and asks the concierge to ship it using the FedEx number. Do not expect to be delivered unless the hotel has an alcohol shipping permit. The solution is to carry wine.
I was impressed if I was interested in following an event that changed the law in relation to a three-tier system or other related issues-Fermentation: The Daily Wine Blog http: //www.fermentationwineblog .com work communication. Other than that, this blog works with politicians on behalf of wine consumers, and the blog is aimed at consumers.
Casual wine consumers are probably not interested in wine politics. Frankly speaking, consumers should be concerned that there may be little added value to the imposed wine distribution costs. DtC may be a new alternative, but the law is not uniform throughout the state. Depending on the state, if you go to Wine Mart or Costco, you will probably add an additional 30% to the distributor for the three-tier system. Simply because of the 83 year old law.
The consumer pays for the value received, but gives the producer or consumer a choice. They state their preferences at the cash register.