The Three-Tier System & Why Service First Always Wins

The beverage industry is a complex landscape of passion, money, drama, earth, science, and art. Alcoholic beverages have been a main ingredient in human history since the dawn of civilization. Wine, beer, and distilled drinks carry the scars of both celebration and failures of the modern world in the last century, proven by its tumultuous relationship as part of the fabric of United States history.

The alcohol industry was famously cut from legal status which ignited the collapse of a national industry. During prohibition, the businesses that manufacture, distribute, and sell alcohol were outlawed and it caused real life people to lose their businesses and be forced to shut down. The end of prohibition may have brought alcohol back to legal status, but the disjointed laws and heavy regulations continue to plague the industry.

The Three-Tier System was designed to create a checks and balances by removing dominance in the market by one brand, with the goal to create a dynamic industry in which the consumer always wins. In practice, this model serves to benefit a few rather than many because it’s the large distribution companies that occupy the most shelf space. At a glance, one could fear the reality that big business wins, continuing the endless challenges of small businesses to thrive in industrial America.

The business of beverages has since flourished in terms of consumer demand, although its heavy taxes and three-tier system continue to restrict small businesses within the system. The inner working of the alcohol industry is incredibly complex, has questionable integrity and is not an even playing field. It’s the very reason that customer service and building long-term relationships is the mindset for thriving in this business. Showing up from a place of appreciation and service while supporting local is the magic ingredient for the drinks business.

Working Within a Complex System

The Three Tier System of selling alcohol was put in place and each state was mandated to control their own liquor traffic once prohibition was ratified. Tier one is the manufacturers, the importers, or producers. The importer is the liaison of importing alcohol into the US and producers are brewers, winemakers, distillers, and importers. Tier two are the wholesalers or distributors, which buys alcohol from the producer and sells it to retail chains, restaurants, wine shops, hotels, and grocery stores. Tier three are retailers that sell to consumers.

Still in many states today the only source of inventory to a retailer is buying from a distributor because no one entity can have business interest in another tier. However, in other states like California, an importer can be all parts of the system. It’s also common that a national wholesaler can set up a brick-and-mortar retail store to sell direct-to-consumer. Southern Glazers is the biggest national chain, responsible for 17 billion in sales and they currently own one third of the US marketplace.

Big business has major advantages because it siphons consumer access to wines of the world. Consumers should have a choice to support a small family producer that organically farms and makes a living producing consciously made wines. This is a mindful approach to the wine business. Small business should have a choice to support other small business, choosing wines that have place and people behind them. It is not surprising that the level of authentic service and love of the craft offered by winemaking families in the old world is some of the best.

Boozy beverages bring people together, however, there remains a corporate and money-driven industry that powers bottles to shelves and into our glasses. Turning up the volume on small producers creates a truly dynamic market and it happens when consumers choose to buy from a local farmer, local importer, and local wine shop. Shopping small yields big results in which we can educate, support, and connect with one another, one glass at a time.

Why Service First Always Wins

At the bottom of the chain lies the invaluable customers who drink wine, beer and spirits. The amazing thirsty souls that seek to explore, taste, drink, and quite frankly, get lit. The best kind of drinker is the curious consumer, one that strives to continually chisel an educated palate and seeks thoughtfully produced beverages.

Service first not only creates long-term relationships but also a level of premiumization that push product quality across the channels. The bonus is the boost in wine education for both consumer and staff, but it comes with higher priority to provide the best service. The dynamics of this industry are that there are infinite channels to educate staff and empower them to confidently communicate with customers.

Choosing to buy from sustainable, thoughtful, and passionate people are how we support the small business owners and how everyone gets a slice in a profitable yet challenging world of wine. There is a stigma in the drinks business that good wine is expensive, this is a harmful myth created by big companies that have the funds to occupy marketing and shelf space. Buying real wine from real people are the ways to get affordable, high quality, authentic products that truly create the checks and balances in the system. As a consumer, wholesaler, and retailer, I hope to share this news with people to bring awareness of wines made with love and intention. Let’s shine a light on the people that make a livelihood within a complex and heavily broken system we call the beverage industry.

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