Wisconsin’s Three-Tier System – A Balanced System that Works

The three-tier system of alcohol distribution was created to allow for competition by preventing manufacturer-owned, vertical monopolies.

The “the three-tier system” allows for greater competition by separating manufacturing of alcohol from the retail sale of alcohol to consumers.  A system designed to foster competition and independence in all three tiers and eliminate the negative social effects of the prior monopoly system. This policy of regulating alcohol distribution is embraced by every state in one form or another.

The three-tier system ensures affordable beer delivery and allows for a greater number of brands for consumer than would otherwise be possible.

• Locally-owned retailers in many other market segments have gone out of business due to distribution changes in recent years. However, the three tier system has allowed convenience stores, mom-n-pop grocers and even rural taverns to remain vibrant because beer continues to be delivered at competitive prices.  It’s allowed them to compete favorably with the global retailers, providing local jobs and paying local taxes.

• For evidence of how the three tier system has fostered completion in the beer industry, take a look at the number of brand choices in the beer aisle. This method of distribution has ushered in the craft beer era by providing a pathway to market for craft brewers through a system of expense sharing that allows more-expensive-to-produce craft products to get to market at a price point that competes favorably with the global brewers.

In Wisconsin today craft brewers are coming on line and growing at eye-popping rates, despite the worst economic times in generations – nearly all of them asking beer distributors to take their product to market even though the law does not require they do.  Beer consumers have more choices of beer than consumers of any other product, available at every conceivable location and affordably priced.

All around the country global conglomerates have attacked alcohol regulations to allow themselves greater market power and less competition.  The Federal Courts tell us that if portions of the three tier system are dismantled, the entire system becomes vulnerable to attack.  For that reason any change is viewed as a major disruption.

The three-tier system is a balanced system that works well for Wisconsin.  Craft brewers are experiencing unprecedented growth, local alcohol retailers are competitive with the global giants and consumers have more choices than ever.   The locally owned beer distributors who employ nearly 3000 people are the keys to it all.