Keep on Truckin’
Homunculus and the other Smuttynose specialty beers took a roundabout route to get here. They were shipped from the brewery in New England down south to Specialty Beverage’s central warehouse in Richmond, VA, then were trucked back northward another 100 miles to this Washington, DC, suburb.
Welcome to the three-tier system.
Brewpubs aside, most beer in this country passes through the hands of three parties before it reaches your mug, with the wholesaler or distributor acting as middleman between the manufacturer and the retailer. This system has been in effect since Repeal. Garrett Peck, author of The Prohibition Hangover, credits this setup to John D. Rockefeller, the richest man in America of that era, who was an ardent supporter of Prohibition until rampant crime and flouting of the law left him disillusioned.
“Before Prohibition, the brewers owned the bars; there was a great deal of fear we would return to this system,” notes Peck. Rockefeller proposed revamping the beer business to make it more like the soft-drink industry. “One of the key goals was to break apart the vertical integration of the brewing industries,” he explains. The distributor was a kind of buffer zone that prevented alcohol manufacturers from directly owning chains of bars. What’s more, each time the alcohol changed hands, you’d get a further markup on the product (Peck estimates 30-35 percent en route to market). “That meant no cheap booze again.”
The three-tier system might add a few pennies to your beer purchase but it definitely has its advantages. The National Beer Wholesalers Association, one of the country’s most influential PACs, credits it with creating “an orderly marketplace” instead of a free-for-all where producers flood the market with cut-rate alcohol. And the NBWA isn’t off base when it lauds the system for promoting diversity in the marketplace. If America had a “tied-house” system where the large breweries operated most of the bars, the big guys could have strangled the baby in the cradle by preventing nascent craft breweries from ever getting to market. Conversely, if big-box chain stores like Walmart and Costco could buy directly from large brewers at a discount, they could force mom-and-pop retailers (the most receptive venues for smaller craft brands) out of business.
