Is the Alcohol Distribution System in the US Flawed?

FORA.tv - Is the Alcohol Distribution System Flawed?

"Glen Whitman discusses the ramifications of the three-tiered system of alcohol distribution, which forces manufacturers to sell their products through a limited number of distributors. He says the lack of competition leads to increased prices and decreased selection."

I don't really have an opinion as I'm not economically-minded, but I found it interesting nonetheless. Thoughts?

Yes it is. My county in MD buys all liquor/wine/spirits that enter the county and then Beer & wine stores buy from them. If you want liquor, you have to buy it from a county owned story. Its all so they can make $

I personally believe that home distilling for persoanl use (not sold) should be legalized. I mean you can make beer, wine, and many other types of alcohol but it is against the law to make your own whiskey.

Yes, in NC you can buy beer in any store as long as its less than 15% and wine anywhere no matter the ABV. Liquor is only sold at the ABC store regardless of the ABV. Why is it that all three types may have the same ABV (lets say 20%) and one is completely illegal (beer), one can be bought at any grocery or convenience store (wine), and one (liquor) can only be bought at a government controlled store and only Monday-Saturday 11AM-9PM??

Oregon has a 3-tier system and it really amazes me that craft brewing has done well here. It certainly drives the prices up.

My beef with the system, is that it limits distribution. Beer should be available to any retailer that wants to sell it.

xxdcmast said:

I personally believe that home distilling for persoanl use (not sold) should be legalized. I mean you can make beer, wine, and many other types of alcohol but it is against the law to make your own whiskey.

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The process of making whiskey is very dangerous; I don't think it has much to do with the govt losing tax money.

In PA the craft beer in my local little six pack store sells for an average of $18-21/6.

Any craft beer. Bud Ice sells for $11/6.

Outrageous.

The only other option is the state stores that can only sell cases or kegs.

dontman said:

In PA the craft beer in my local little six pack store sells for an average of $18-21/6.

Any craft beer. Bud Ice sells for $11/6.

Outrageous.

The only other option is the state stores that can only sell cases or kegs.

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I'm still confused on how to buy beer in PA. Last time I was there (over Christmas) I went to a 6 pack store, the selection was BMC and Yuengling. Ok, its attached to a bar I figure I'll find better at a State Run store with bad hours. I go there, great selection, I can get a case of Oaked Arrogant Bastard Ale 22's for $53. Great price but I gotta buy a whole case? What if you want to try something new how do you do that?

dontman said:

In PA the craft beer in my local little six pack store sells for an average of $18-21/6.

Any craft beer. Bud Ice sells for $11/6.

Outrageous.

The only other option is the state stores that can only sell cases or kegs.

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Have you been to the foodery at 2nd and poplar? Never bought beer there but I go to standard tap (across the street) all the time and I hear the foodery has a good selection. I'm in ridley park so I go to other places for 6ers and single bombers. Usually go the the beer yard in wayne for cases and sixtels.

Mini rant ahead:
I think the system is just ridiculous. And when 27+ states have tried to raise taxes on alcohol, it just gives us more reasons to homebrew. (States Eye Higher Taxes on Beer, Wine, and Liquor - US News and World Report)

The so called "sin taxes" just get my goat. You could tax anything you don't agree with and claim its a "sin tax." Hey, how about we make an abortion tax, or maybe a handgun tax? One persons sin is another persons salvation! Free Willie!

norcal_nerd said:

The process of making whiskey is very dangerous; I don't think it has much to do with the govt losing tax money.

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Wrong on both counts. There are certainly dangers to distilling, but no more than home canning (which you will note is entirely legal). Its illegality is (and always has been) about revenue.

Back to the topic at hand. Yes, when it comes to alcohol distribution the US is extremely backward. Limitations on interstate commerce that, if applied to other products, would have people screaming bloody murder are accepted with scarcely a murmur. State lawmakers are intent on saving the poor alkies from themselves by keeping alcohol prices artificially high. Distributors in many states are a de facto (or even de jure) monopoly.

Skins_Brew said:

Yes it is. My county in MD buys all liquor/wine/spirits that enter the county and then Beer & wine stores buy from them. If you want liquor, you have to buy it from a county owned story. Its all so they can make $

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Yeah, but moco liquor stores have the best prices I have seen anywhere for liquor with only rare exceptions. Plus the sales are awesome.

norcal_nerd said:

The process of making whiskey is very dangerous; I don't think it has much to do with the govt losing tax money.

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no it isn't. freeze distilling isn't dangerous at all.

The system seems to work pretty well here in Florida, but what I can't stand are those stupid laws that state that you can't buy alcohol on Sunday mornings (or in some counties, not at all). It just doesn't make the slightest bit of sense.

But when I go on vacation to another state, I am always confused when I can't buy craft beer (or any beer at all) in grocery stores, etc and would have to look for some weird government outlet (which I refuse to do on principle) to buy some.

flowerysong said:

Wrong on both counts. There are certainly dangers to distilling, but no more than home canning (which you will note is entirely legal). Its illegality is (and always has been) about revenue.

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I was going to say the same thing hell taxing the distillation of alcohol was one of the contributing factors to the american revolution. Then once we were free the US govt taxed it anyways. If you dont believe it wikipedia the whiskey rebellion.

Not only does the limited competition drive up prices, but in many cases the laws of the state drive up prices throughout the three-tier system. For exmaple - In Ohio you'll see a lot of stores announcing that they're selling beer or wine at "State Minimum." That's because the state mandates a certain percentage mark-up between the wholesaler and the retailer. So - not only does a retailer have limited options as to whom he can purchase product from, but then he's also being told you have to sell that product for at least x% more than you bought it.

Yes, the state wants to control the stream of alcohol so they can get money and control who can sell/buy, etc.

liquor sales has nothing to do with safety. There are many countries who allow distillation and with minimal safety precautions it can be done without worry.

dontman said:

In PA the craft beer in my local little six pack store sells for an average of $18-21/6.

Any craft beer. Bud Ice sells for $11/6.

Outrageous.

The only other option is the state stores that can only sell cases or kegs.

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Come across the bridge. Total Wine & More - Cherry Hill, NJ
Trade ya for cigarettes.

I always wondered why there were so many PA plates in the parking lot.

Yep - it is screwed up fo-sho. When I travel I never know where to go buy beer. Should just be able to go into any groc store or convenience store to buy it. PA is screwed up. Had to go to a bar and order a 6-pack "to-go" wierd.

Damn,I can't believe I'm saying it, but I'm glad I live in California! $18 buck for a 6er?!?! that's outrageous. I B*tch about paying $10/6er for micro's. Buying liquor at a gas station along with a fill-up and a charleston chew at 11 o' clock at night is a beautiful thing.....not to rub it in or anything.

I was just thinking the same thing here in Missouri. Some craft 6'ers go for as little as 6-7 dollars (Schlaffly Dry Hopped APA), bells two hearted (10.99 and worth every penny) and really high gravity or lesser known stuff might get into the low teens. I wouldn't know what to do if I had to lay down a 20 for a 6'er....brew more I reckon.

xxdcmast said:

I was going to say the same thing hell taxing the distillation of alcohol was one of the contributing factors to the american revolution. Then once we were free the US govt taxed it anyways. If you dont believe it wikipedia the whiskey rebellion.

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Humm....that's odd...wikipedia says that it started after the war! That it was Pennsylvania settlers uprising against the only tax Congress set to help pay the debts of the Revolutionary War. In fact, the major uprising happened in 1795 and president Washington had to amass an army almost the same size as the whole for the Revolutionary War. Alexander Hamilton was the major proponent for the first national tax as "more as a measure of social discipline than as a source of revenue."

So in short....you can't say that it was a tax that was a factor for the war (when it was the early US government that enacted it well after the war: 1791). But it does show how the US government has always resorted to taxing alcohol to get its revenue. Oh, another interesting note is that apparently they taxed larger distillers 6 cents per gallon, while smaller ones had to pony up 9 cents per gallon (Washington himself was a large scale distiller). History sure is interesting!

flowerysong said:

Back to the topic at hand. Yes, when it comes to alcohol distribution the US is extremely backward. Limitations on interstate commerce that, if applied to other products, would have people screaming bloody murder are accepted with scarcely a murmur. State lawmakers are intent on saving the poor alkies from themselves by keeping alcohol prices artificially high. Distributors in many states are a de facto (or even de jure) monopoly.

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I have less of a problem with the taxation than with the distribution monopoly.

If you want to tax booze (to save the alkies), sure, go ahead. I don't entirely agree with it but at least I can see a logical argument for this.

But that doesn't mean the state should get a monopoly on selling the stuff! You can have high taxes on a product (eg. cigarettes) but still let the market take care of product selection, distribution, and retail.

Yunus said:

I'm still confused on how to buy beer in PA. Last time I was there (over Christmas) I went to a 6 pack store, the selection was BMC and Yuengling. Ok, its attached to a bar I figure I'll find better at a State Run store with bad hours. I go there, great selection, I can get a case of Oaked Arrogant Bastard Ale 22's for $53. Great price but I gotta buy a whole case? What if you want to try something new how do you do that?

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buying beer in PA is simple, efficient and not in any way F*%@D up. If you want a...
six pack of craft* - one store
case of another - second store
bottle of wine - third store
some chips and dip to munch on - a fourth store.

What could be more easy, efficient, and straight forward than that?

If I want to try something new, I either try and find it at a bar (not the easiest way, and more dumb luck), or do a group buy. Me and 3 friends just split a case of founders breakfast stout so we could all get a six pack without dropping $70 on a case.

*I did leave out the part where in order to get the sic pack of craft brew you go to 27 stores to find one that has a decent selection. That is a whole other topic.

nowise said:

Mini rant ahead:
I think the system is just ridiculous. And when 27+ states have tried to raise taxes on alcohol, it just gives us more reasons to homebrew. (States Eye Higher Taxes on Beer, Wine, and Liquor - US News and World Report)

The so called "sin taxes" just get my goat. You could tax anything you don't agree with and claim its a "sin tax." Hey, how about we make an abortion tax, or maybe a handgun tax? One persons sin is another persons salvation! Free Willie!

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I agree with you completely. Georgia has some of the highest sin taxes on alcohol it's ridiculous. I have a "sin tax" how about everytime an elected official raises taxes on us we get to lower their salary!

Bastids!

Mark

Wiki article on Alcohol Laws by State.

Alcohol laws of the United States by state - Wikipedia, the free encyclopedia

I think I'll move to Nevada or Missouri.