News How the three-tier system holds back BMC

Discussion in 'Beer News & Releases' started by DaveAnderson, Nov 15, 2012.

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  1. jesskidden

    jesskidden Meyvn (1,303) Aug 10, 2005 New Jersey

    That’s why I asked “When?” in reference to your claim of "prior to Prohibition". Yeah, in the years immediately leading up to Prohibition in the 1910’s, the “shipping breweries” barrelage stagnated while total US production increased. Tied houses helped the large locals and regionals in some markets (altho’ the nationals also owned saloons – Schlitz had 1600, Pabst had huge beer halls in NYC, etc). But that was hardly the only reason since there were a number of other industry and economic factors - more brewers bottling and under-selling the nationals (which depended more on bottled sales for distant export markets), rising costs of shipping and ingredients, the increasing strength of the Temperance movement (local option, state Prohibition laws, Sunday closings, anti-growler laws), war in Europe, etc.

    Still, not sure if “overtaking national breweries in market share” is how I’d put it but I don’t know if that’s the author’s terminology or yours. (I don’t have $30 for the article – well, I have it but will spend it on a case of beer.:wink:) Nor is that what the abstract claims- only that the local and regionals were able to offer "a competitive challenge to national firms"- with which, given the approx. 7% of the market the Big 3 (the biggest, but not the only "nationals") had at the time, no one would disagree - seeing as there were over 1700 other breweries in the US at the turn of the century.

    Certainly, most of the large regionals and other shipping breweries weren’t close to even a million barrels a year in production (Ruppert in NYC was probably the notable exception) - most of the other large US locals/shippers were selling in the 500k bbl. range – not even close to “overtaking” AB's million and half barrels a year.

    Nor, as I see it, is it what you claimed - that AB's pre-Pro market share was "dramatically declining". I noted AB's rise to 1 million barrels from the late 1870's (when they were #33 )to 1901 above. Barrelage figures are not available for every year in that period but AB’s totals went up every years after hitting 1m bbl., through at least 1906 (when they went over the 1.5m barrel mark). For one example, in 1904, AB claimed their increased production figures were 20% of the total increased total US barrelage of 900k. As US production increased after that, AB sales stagnated at around the 1.5m bbl., resulting in a reduction of market share from 2.7% to 2.3% by 1911, but, much as it probably didn't sit well with Adolphus, that’s hardly a “dramatic decline” nor does it suggest that other brewers were "overtaking" AB.

    It also appear that Pabst (and possibly Schlitz, for which I have no pre-Pro figures handy) were more affected by the author’s “competitive challenge” than AB was. Pabst, in particular, for the period of 1903-1913, hovered around a barrelage of 900k-1m bbl, while the US total went from 46m to 65m bbl., so their market share dipped from 2% to 1.5%.
  2. chcfan

    chcfan Devotee (466) Oct 29, 2008 California

    I certainly believe that there is some "crowding out" going on, especially with distributors that are owned by big beer, but the fact is that craft beer is very widely distributed in the US. You can find beers from several California breweries up and down the east coast. If a brewery wants to enter a market, they will find a distributor to partner with. They may exist, but I've never heard any stories of a brewery who wanted to enter a specific market but was not able to due to some part of the 3 tier system. The reason why Pliny the Elder isn't in every grocery store is not because RR is being bullied by three tier system, it's because they don't even make enough to supply the demand in their existing markets.
    Also, smaller breweries don't have the resources or inclination to attain a fleet of trucks and drivers to do their own distribution, especially across state lines.
  3. rlcoffey

    rlcoffey Initiate (0) Apr 20, 2004 Kentucky

    There is a reason that in most fields it is big business that supports new regulations.
  4. robmoak

    robmoak Initiate (0) Nov 13, 2012 Mississippi

    That's a great point, but I think you are misunderstanding my argument. There has obviously been an explosion in demand for craft beer in the past few years, and the market has adjusted as a result. As far as distribution goes, it obviously varies depending on state laws, demand, and the output capacity of the brewery. Some states, especially the highly populated northeastern states with relatively lenient beer laws, provide an economically viable market for relatively large or expanding craft breweries located outside of that region; but it is nearly impossible for the more sparsely populated states to get a taste of anything new. I believe that if the breweries didn't have to go through distributors, then it could be easier for states like MS to expand their variety. Since there is no Founders sold in Mississippi, Mississippi will have a tough time showing demand for their product. When I drive to AL, TN, LA, or FL to get beer that isn't available here (like so many Mississippians do), those breweries don't see that as an increase in demand from MS, they see it as an increase in demand in the respective state where the beer was purchased. Now if I could order that same beer straight from the brewery (granted it would be at a much higher cost) or find SOME way to show the brewery that that sale is coming from Mississippi, then they could see the demand for their product in new markets. Also, I never said that if the three tier system was abolished, then breweries would magically be able to start making unlimited quantities of high quality beer to stick on the shelves of every grocery store in America. I realize that brewery expansion is an extremely risky and dangerous venture that can affect product quality.

    In regards to the "fleet of trucks" comment, I obviously don't think that distributing companies should be banned and that all breweries should be responsible for their own shipping. There is a market niche for beer distributors just like there is a niche for distributors of a myriad of other products; the difference is, you usually aren't required by law to purchase that product from a retailer who received said product from a distributor. Perhaps if it was easier, and maybe even cheaper, for breweries to get their product to market, then we would see an even more substantial proliferation of new breweries and could have a better shot at taking down the macros. All I'm asking for is a little collaboration, not litigation... pun intended.
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  5. savagewhisky

    savagewhisky Initiate (0) Aug 8, 2007 Virginia

    I'm confounded by this fear and hatred of big brewers. Yes, it's true that the biggies have and could force their distributors to only carry their products (pushing out craft breweries) and there's a lot of worry about their moves to buy up or take part ownership in small brewers, but as I see it this could really be a positive and a blessing for craft brewers.

    AB and Miller obviously recognize that craft beer is where the market is going. So, it isn't really surprising that they want to get into the game. For craft brewers, getting in with one of the big guys suddenly gives them access to a nationwide distribution network--this is awesome for the small brewer and for us drinkers (assuming the big company doesn't force a reduction in quality from the small ones). And we can still keep supporting the "mom and pop" brewers who aren't picked up by a big company.

    The problem isn't that big beer companies have so much power that they are corrupting the mandatory three tier system: the three tier system is what allowed them to get so big and keep out competition for so long. The system isn't all good or all bad--distributors are definitely necessary for brewers--especially the small ones. But the fact that it's mandatory, means that brewers have this artificial barrier to market and big brewers have been able to abuse that. Because the big guys make up such a huge amount of most distributors' portfolio, they can threaten to raise prices unless they only sell their beer. If they don't pick up the craft beer guys then the small brewers are kind of SOL when it comes to getting their beer to market. They can sometimes self-distribute very limited quantities, but they aren't ever going to become a really big threat to the big brewers.

    I'm not saying that distributors should be abolished, but I think this fantasy that the three-tier system is what created the craft beer movement is just that: a fantasy supported by distributors. Just look at how many breweries we had in America before prohibition and the three-tier system.

    This is probably a long-winded rant and not a whole lot of people seem to agree with me on this point, but that doesn't stop me from thinking the absolute best case scenario would be to dump the mandatory three tier system (a state-by-state fight) get rid of franchising and territory laws so that we can have more competition among distributors. Seriously, if distributors were told by AB that they had to carry 100% AB products, but they were watching other distributors make money selling craft beer, they might be less inclined to bow down to AB's demands. I'll shut up now.
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  6. nbaeteer

    nbaeteer Initiate (0) Apr 13, 2013 Pennsylvania

    Plenty of regional breweries did get shut out. Yuengling is the exception and one of the few survivors.
  7. drtth

    drtth Poo-Bah (3,244) Nov 25, 2007 Pennsylvania

    But if the three tier system itself was the cause, we'd not have Victory, Stoudts, Troegs, and the other 60-70 or so craft breweries in PA, many of which are expanding and growing. Similarly, Yuengling would not have grown into a regional brewery the last 20 years or so, Straubs would not still be surviving and growing, The Lion would not be still producing their own line of beers, and Rolling Rock would have not survived as a local brewery long enough as a local/regional brewery to have been worth buying out, etc. Nor would the number of breweries be growing nationally and craft breweries be increasing the national total dollar value of their sales yearly for some years now.
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  8. jazzmac

    jazzmac Initiate (0) Nov 8, 2002 Connecticut

    So what everyone is saying that is against the 3 tier system and how if it didn't exist craft would be in a much better position, is that the small craft breweries should self distribute? That makes loads of sense, it's another license, hiring a sales force, drivers, and buying and insuring trucks. Hmmm...
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  9. savagewhisky

    savagewhisky Initiate (0) Aug 8, 2007 Virginia

    I think the problem is that some are setting up a false choice that you either have a strict 3-tier system or you have no 3-tier system. Distributors, the middle tier, do serve a hugely valuable service for breweries wishing to grow and expand (they have the trucks, sales force etc). But for some brewers, both the biggest and the smallest, the mandatory three-tier separation can be costly or bottleneck sales. I'm probably beating a dead horse here, but I just can't see how if using licensed distributors was optional instead of mandatory that would ruin the whole beer market. I bet the vast majority of brewers would continue to use licensed wholesalers even if they had the choice. But, now the other argument is that we make it a lot easier to become a distributor. That would nip and problems re: brewers consolidating distribution power in the bud (so to speak).
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  10. JackHorzempa

    JackHorzempa Poo-Bah (3,104) Dec 15, 2005 Pennsylvania

    There seems to be a fair amount of discussion about whether the three-tier system is ‘good’ or ‘not good’ (where I suppose the definition of ‘good’ is dependent on the views of the person posting).

    I am uncertain whether the three-tier system is “good’ or “not good’ but it is the law of the land, with each state having their own laws and regulations on this matter. What I find to be disturbing in the article is evidence that the BIG breweries are trying various ways to ‘circumvent’ the three-tier laws/regulations in various states. The article detailed a case in Arkansas in which AB InBev was making things difficult for ‘un -favored’ wholesale distributors by diminishing their profits; the goal was to get the ‘un-favored’ wholesalers to sell out. Luckily the Arkansas legislature passed a law making this business practice illegal (despite AB InBev filling a letter of protest on the behalf of the wholesalers). There was another case in Illinois where “Anheuser-Busch InBev stands accused by the state’s distributors of holding an illegal interest in a top Chicago-area wholesaler.” I haven’t researched the final disposition of this case but the author indicated that a Liquor Control Commission ruled favorably for AB InBev.

    There is no doubt in my mind that AB IbBev and MillerCoors will continue to take steps that give them a competitive advantage and they have the resources (money and lawyers) to ‘test’ the willingness of the various states to enforce the laws and regulations of the three-tier system. I would like to state that I am confident that every state’s Judicial System (state Attorney Generals, Liquor Control Commissions, etc.) will aggressively and competently enforce their state laws and regulations but I really don’t feel confident in this regard.

  11. HRamz3

    HRamz3 Initiate (0) Feb 9, 2010 Pitcairn
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  12. jesskidden

    jesskidden Meyvn (1,303) Aug 10, 2005 New Jersey

    Since this thread was begun, Ken Grossman book, Beyond the Pale: The Story of Sierra Nevada Brewing Co., has been published. In it, he wrote:
  13. evilcatfish

    evilcatfish Defender (623) May 11, 2012 Missouri
    Beer Trader

    The three tier system is a good thing. Period.

    And I'm pretty much done listening to people bitch and hate on AB-Inbev and Miller Coors
  14. rgordon

    rgordon Crusader (743) Apr 26, 2012 North Carolina

    It really goes back to the repeal of Prohibition (The Volstead Act). In many states wholesale lobbies were very effective with state legislatures in developing franchise, territorial, and other rights for wholesale operations. Many wholesalers became very powerful and have dominated the beer distribution landscape moving towards now. The wholesaler buys from the brewer , the wholesaler sells to the retailer (bar), and the retailer sells to the rest of us, ad infinitum- 3 tier system. The real problem is: with such a highly regulated commercial product such as beer, what other distribution system might be fair and adequately ageeable to various political realities that currently oversee and collect taxes on these products? It's all about money.[/quote]
  15. rgordon

    rgordon Crusader (743) Apr 26, 2012 North Carolina

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  16. tozerm

    tozerm Initiate (0) Jul 1, 2005 Washington

    Ken Grossman is referring to the component of the three-tier system that everyone seems to ignore... logistics. The weird, arcane laws that he refers to are not the reason that the system has been good for craft brewers, it's the logistics the system provides and having bodies on the street selling his product that have help take his great beers national. You would not have breweries going onto the national scene/scale without distributor networks.
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  17. Joshmistake

    Joshmistake Aspirant (284) Sep 4, 2012 Minnesota

    Stone distributes their own beer in all of Southern California...and they also distribute Port, Lost Abbey, Modern Times, St. Archer, Mother Earth, Russian River, Bear Republic, and Maui to name a few. Opening new tasting rooms might be perceived as going "commercial" but it's getting their beers into the hands of more people. Like Lagunitas and other bigger craft breweries, Stone is fiercely independent and does what they want, when they want...and how they want. While other breweries sell out to BMC it's refreshing to see Sierra, New Belgium, Deschutes, Stone, Lagunitas and others get their beer to more people. I'd much rather see a Lagunitas tasting room go up than some "Blue Moon" or GI store...and i'd much rather see people being introduced to great craft beer in a place like that. How can that be a bad thing? Powerful position? they don't have to buy into BMC money...or BMC tactics like buying tap space and paying to play.
  18. tozerm

    tozerm Initiate (0) Jul 1, 2005 Washington

    Ya.. cause it would be super easy for Black Raven Brewing in the Seattle area to self-distribute to one of the bars near you in Virginia.. :wink: thank God they could bypass those evil wholesalers.

    I hope you would be ready to open up your checkbook to pay all the freight to get a case of beer from Washington into the corner market near you in Virginia. Competition is awesome!
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  19. rgordon

    rgordon Crusader (743) Apr 26, 2012 North Carolina

    Providing great beers for consumers from distant markets at the best price possible is what excellent beer loving wholesalers country-wide do for a living. It's a headache, but it's fun. One should not forget that beer doesn't appear in certain markets by accident. Good wholesalers operating within this "3 tier system" do a great service to beer lovers in their communities.
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  20. dennis3951

    dennis3951 Crusader (789) Mar 6, 2008 New Jersey
    Beer Trader

    In NJ, NJ breweries can self distribute. I don't think out of state one can.
  21. familydog

    familydog Initiate (134) Jul 11, 2006 Pennsylvania
    Beer Trader

    I've read his book and I certainly recommend it. The irony here is that national breweries urged the creation of a mandatory three-tier system in order to hurt their small competition. By the time the Eighteenth Amendment was ratified, national breweries lost much of their market share to local brewers. This was a reflection of industry as a whole. The market naturally decentralized.

    With all due respect to Ken, we don't need a mandatory three-tier system to encourage the growth of craft breweries. We need a system that respects the distribution wishes of producers and the demands of consumers. In my part of Pennsylvania, I can't get his brewery's beer. The off chance I can, I have to buy it outdated. Wholesalers have subcontracts and their subcontracts have subcontracts. My local retailers have no bargaining power. The craft breweries have no bargaining power. As a result, the consumer has no bargaining power.

    If we have to have a mandatory three-tier system of distribution, we need to at least get rid of the territory and franchise laws.
    russpowell likes this.
  22. jesskidden

    jesskidden Meyvn (1,303) Aug 10, 2005 New Jersey

    After Falstaff bought the Ballantine brands (which were self-distrbuted) in 1972, and the brewery closed, Falstaff set up a distribution depot in North Bergen (looks like it also supplied NYC).
    I also have receipts for kegs from F & M Schaefer in Brooklyn, delivered to a north Jersey bar (think I also have Schlitz receipts as well - Schlitz was in Brooklyn at the time). I imagine Rheingold, Piels and Ruppert may have also crossed the Hudson to do deliver in NE metro NJ. Wouldn't be surprised if the Phila. breweries did as well in south Jersey. Doubt any out-of-state brewers are doing it today, of course.
  23. fx20736

    fx20736 Meyvn (1,010) Mar 7, 2009 New York

    Much ado about nothing
  24. Mebuzzard

    Mebuzzard Poo-Bah (3,464) May 19, 2005 Colorado

    Three tier system hardly matters any more now, with AB and MC distributing most everything anyway. Soon, it will be AB-InMillerBevCoors anyways and the primary reason for a three tier system will be diminished.
  25. pmarlowe

    pmarlowe Meyvn (1,218) Nov 27, 2010 Virginia
    Beer Trader

    The three tier system is a racket--a great example of regulatory capture. There would be nothing preventing wholesalers from operating in the absence of their being mandatory. To the extent that they truly provide value, they'd prosper even in the absence of legislative cover.
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  26. cestlavie

    cestlavie Disciple (392) Oct 27, 2011 New York

    Considering such a large majority of wholesalers in this country are independent, this statement shows a lack of knowledge. Franchise laws may apply, and wholesalers sell BMC, but 90% are not "branches" or WODs, and sell many, many craft brands as well. And their critical mass of BMC allows them to get the craft brands to market for customers to drink, because they already have established relationships of 75+ years in their respective markets. Without the 3 tier system, no one here would be able to buy the breweries they love in their local store. Period. And every single brewery owner knows this to be true (even self distributing breweries reach a point where the law of diminishing returns and economies of scale starts to eat into margins, and attach themselves to a wholesaler). Thus, many breweries ie: Stone, Hill Farmstead, etc... have started their own distributorship, so that they too can get in the 2nd tier game.
    The only problem real problem here is that BMC would PREFER to go back to a 2 tier system, and direct ship. This would go back to pre-pro, and we ALL lose out. If the big guys direct shipped to customers (big box stores), distributors would not have the critical mass to be profitable, and you know damn well that big beer isn't getting your favorite craft brews to market. It would collapse the whole craft beer movement on itself. Be happy for the 2nd tier, because without it, we would all have to go to whatever breweries were able to sustain in a market where they could sell enough beer out of their doors to stay open. Trust me, we don't want that.
  27. cestlavie

    cestlavie Disciple (392) Oct 27, 2011 New York

    Again, a lack of knowledge here. BMC would direct ship, there would be no distribution contracts or franchise laws, and distributors would not have the capital from critical mass to operate. The system would collapse.
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  28. cestlavie

    cestlavie Disciple (392) Oct 27, 2011 New York

    For everyone to understand this... BMC does not OWN very many branches/distributors. Most are family owned and operated, for generations, similar to what (hopefully) many of our craft breweries will look like to our grandchildren. Think about them as a craft brewer, and BMC as BMC (best analogy I can think of). They have the same fight to stay operational and get ALL of their brands to market the same way a craft brewer fights to get their beer to market when self distributing. Except this distributors actually have the $$ from holding BMC franchises to get your Victory, Stone, Lagunitas, Dark Horse, Green Flash etc to market. Basically, craft brewers are getting to market on the back of BMC dollars. If those dollars disappear, how is that beer (profitably) getting to market? It won't. That, or you'll see 17.99 Lagunitas 6 packs, and $12 pints of Sucks... and at a lot less places, since the distributors won't have the same footprint without BMC contracts... making craft beer EXTREMELY hard to come by.
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  29. Mebuzzard

    Mebuzzard Poo-Bah (3,464) May 19, 2005 Colorado

    True....but my point isn't belittling the 3-tier idea. It's point out that the 2nd tier (for beer anyway) is thinning, thus making the system less effective and eventually less beneficial to craft.

    Boston Beer, Sierra Nevada and New Belgium (the big 3 crafts) are all distributed (in CO) by Coors. Technically, Coors Distributing Company is separate from Coors Brewing...but uhhhh..

    Sure, this is a small market, but it serves as an example. See, CDC is the only one that can handle the load. Sure, Republic and Southern distribute beer, and smaller distros are around. You should see the CDC center. I interned there and it's quite impressive. Anywho, as craft grows, more and more brewers will need a strong distributor with serious bank (as you point out). And who are the strong ones? Perhaps it's not clear, but CDC is raking in brands and SKUs seemingly daily. Southern and National/Republic concentrate on wine and spirits, so that leaves fewer to compete with BMC distributors.

    How does BMC view craft? As a threat (a small one)....but also as an opportunity. That opportunity is to distribute these upstart crafts, use BMC dollars (as you say) to "persuade" distribution, and charge a pretty penny (costs went up from both CDC and Bud recently on ALL products). Bud is trying to consolidate distribution by taking over distribution or the breweries themselves, effectively wiping out the 2nd tier in some regions. So we have BMC embracing the 2nd tier, because if BMC distros are the only ones around (overtly like CDC or behind-the-scenes like smaller companies being pushed by BMC dollars), who cares how many craft breweries are out there? More money for them. Sadly, relationships are becoming less significant.

    The bottom line is this: Yes, the three tier system should work. Yes, the 2nd tier would help smaller breweries. BUT this 2nd tier is being overwhelmed by BMC through technicalities, thus effectively eliminating its beneficial effects to smaller companies.
    cestlavie likes this.
  30. frazbri

    frazbri Crusader (733) Oct 29, 2003 Ohio

    Any evidence or documentation to back up your theory? What brewers were truly "national" between WWI and WWII?
  31. jesskidden

    jesskidden Meyvn (1,303) Aug 10, 2005 New Jersey

    You are trying to prove your point by using as an example the only wholly-owned MillerCoors distributor:
    I don't have stats on the current number of MillerCoors distributors (some have resisted pressure from MC to merge, and in some areas separate, independently owned Miller and Coors houses still exist) but at the time of the merger in 2007, Molson Coors had 550 US distributors and owned 3 of them. Miller had about 500, owned none, and there was a 60% overlap with those already carrying both breweries' brand.

    By contrast, today AB also has "more than 500 distributors" and owns about two dozen - they've recently bought back a NJ AB house, which AB sold in the 1990s. It does appear that InBev is interested in getting further into the second tier where legal, whereas AB under Busch family control had been getting out of wholesaling. Not very familiar with the portfolios of scattered AB-owned houses, but it does seem that they tend to be AB-exclusive, unlike the example you give of CDC carrying craft and other breweries' products.
    #71 jesskidden, Mar 9, 2014
    Last edited: Mar 9, 2014
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  32. jesskidden

    jesskidden Meyvn (1,303) Aug 10, 2005 New Jersey

    Well, that period is somewhat out of the ordinary as far as brewing history goes, since more than half of it falls in the unfortunate period known as the "Prohibition era". :wink:

    In the pre-Pro era, the national brewers were referred to as "shipping breweries" - those that had a large percentage of their market outside their home region, and included AB, Schlitz, Pabst as well as Lemp (St. Louis), Blatz and Christian Moerlein in Cincinnati. They were also the breweries that bottled the largest percentage of their own beer - many regional and local breweries still predominantly kegged their beers, and, when bottled, they were often packed by independent local bottlers.

    After Repeal, in the year before the US entered WWII, the brewers who nationally advertised (mostly in newspapers and national magazines- suggesting a wide-spread, if not national, distribution footprint) were the pre-Pro Big 3 of AB, Schlitz and Pabst, along with Falstaff (first significant sized brewer to brew the same beer in a brewery outside it's home region by owning breweries in Nebraska and New Orleans), Ballantine and Miller. Those six companies according for about 1/6 of the US beer market in 1940.

    See his answer to same question (I also didn't realize this thread was almost a year and a half old :grimacing:) in post #38 on page 1. That study states that:
    so the national "shipping brewers" had a pretty insignificant share of the US market to begin with (especially compared to what it would become in the last half of the 20th century) and not sure I'd call that decrease "...much of their market share to local brewers."

    It should also be noted that many of the regional breweries in the population-dense, urban northeast (like Ballantine, Ehret, NYC's Berheimer & Schmid, Ruppert, Doelger, Frank Jones, Phila's B&E) were larger or the same size as some of the national shippers.

    Big factors in that share loss include state prohibitions in markets which the shipping brewers serviced due to a lack of large locals and Pabst's stagnanting sales in that period. Pabst reached the million barrel mark in the early 1890s and was still right around 1m bbl. in 1910- even as total US production nearly doubled (32m bbl > 60m bbl.)
    AB, OTOH, increased it's barrelage from an estimated 700-800k in 1895 to 1.5 million in 1911, but it is the case that the national shippers growth rates were below the total industry's rate.
    #72 jesskidden, Mar 9, 2014
    Last edited: Mar 9, 2014
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  33. familydog

    familydog Initiate (134) Jul 11, 2006 Pennsylvania
    Beer Trader

    Yes, of course.

    National breweries existed prior to the Eighteenth Amendment. Obviously, no national brewery existed between 1920 and 1933. Pabst and Anheuser-Busch were the top beer producers before prohibition. However, their output began to stagnate and sales declined leading up to 1920. This is outlined in Thomas Cochran's book "The Pabst Brewing Company." One of the major factors that contributed to the success of local breweries in the early 20th century was their ability to own or manage local saloons. Vertical integration gave small business an economic advantage over national corporations.

    Anhueser-Busch published a pamphlet in 1924 which outlined a legal framework for the brewing industry after prohibition. Unfortunately, there is no online version available, but you can find the title here. They argued against the tied-house system and urged a greater role for wholesalers. AB wasn't the only factor in creating the three-tier system, but they played a major role.
  34. cestlavie

    cestlavie Disciple (392) Oct 27, 2011 New York

    Not true. Like Miller and Coors, about a dozen of 500+ distribs are Wholly Owned Distribs, or WOD's, as I pointed out earlier. 97% of distribs operating in our country and not WOD's. Both MC and ABInBev, although ABI is trying very hard to change that.
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  35. rgordon

    rgordon Crusader (743) Apr 26, 2012 North Carolina

    Thank you for your thoughtful analysis. Business is business, but the best really good beer wholesalers that I've known through the years want to provide a wide range of beers, fairly priced, without attachment to any monopolizing entity.
  36. jesskidden

    jesskidden Meyvn (1,303) Aug 10, 2005 New Jersey

    What's "not true" about my post?
    That reads to me exactly what you just wrote. The link in my post is to AB's own page called "Wholesaler operations", which has apparently not been updated and lists only 13 WOD's (so does not included recent purchases in Chicago and NJ, which I rough-estimated "around two dozen". They now claim, in current Press Releases:
  37. rgordon

    rgordon Crusader (743) Apr 26, 2012 North Carolina

    That's true, but history is difficult to shed. Many a fortune has been "won" within this system, and as I have pointed out elsewhere, it is very political and revenue centric. For instance, the North Carolina Beer Wholesalers Association is very powerful indeed. The good news is that there are some really good players that do not continually push all of the legal buttons, and concentrate on finding and selling good beer to an eager public.
  38. cestlavie

    cestlavie Disciple (392) Oct 27, 2011 New York

    hahaa I meant to quote MeBuzzard's post, not yours. As you can see, I was reiterating what you said for the most part.
  39. Mebuzzard

    Mebuzzard Poo-Bah (3,464) May 19, 2005 Colorado

    My point is that BMC has power within the 2nd tier, either through wholly (or partially) owned distributors or with its immense capital (as cestlevie pointed out) of persuasion. And a BMC merger would increase this, methinks, since one supplier would dominate a distro's portfolio.

    Keep in mind that I'm paranoid when it comes to large, corporate mechanisms :flushed: I fear that greed overrides all good things if unchecked, including beer. I can see, within 20 years, an AB/SAB/Coors merger along with a rapid consolidation effort of distribution channels, with political pressure that has a motto of "if we get rid of this antiquated, oppressive, regulatory (heck, they may throw in Communist for good measure) 3-tier system, then we can save the consumer money by knocking out the middle man."
    cestlavie likes this.
  40. rgordon

    rgordon Crusader (743) Apr 26, 2012 North Carolina

    Smart marketers will always be able to work around the edges of huge business, bean counters, and group-think corporate operators. Opportunity is present with amalgamation because people really like people and not systems. Bigger does work, but it does not stifle brains. It's the advertising dollars that are the most damaging to our collective intelligence.
    Mebuzzard likes this.
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