Here in Canada, craft distillers are lucky in that in most jurisdictions you can hand-deliver a case of your product to pubs, bars and restaurants. Not so in America where the 3 Tier system dictates that the craft distiller must pass his product to a wholesaler who in turn places the product with retail end users.
Buy why? Where did this all come from? I recently stumbled upon a white paper that explained all that to me. In a nutshell – it goes like this.
In the 1930s, when it became apparent that President Roosevelt was intending to repeal Prohibition, one John D. Rockefeller moved swiftly. Rockefeller was a tee-totaller and very opposed to the evils of drink. He used a sum of his own money and hired two people to compile a report on how to control alcohol. The report was ultimately titled “Toward Liquor Control”. The two people whom he hired to write the study were Raymond Fosdick and Albert Scott. Together they traveled across the USA, across Canada and through Europe talking to Governments about alcohol.
Rockefeller then used his influence in Washington to make sure politicians read the report. What emerged from his efforts was the 3-Tier system of liquor distribution. Such is the Rockefeller influence.
Throughout the ensuing decades, this report has come under fire and the 3-Tier system has been challenged in law courts. The argument most often used in courts was the Commerce Clause in the US Constitution. However, in the case of alcohol, the social bias adopted by the judges on benches was one of – let’s not treat alcohol as a commodity that is freely and openly traded. The Commerce Clause was regarded as “dormant” in the case of alcohol. All of this came to a head in the 2005 case of Granholm v. Heald. The Supreme Court ruled that individual States cannot offer special treatment to craft wineries. This line of legal thought has now been extended to craft distilleries by the look of it. In other words – if it is good enough for ABC Craft Distilling then it also applies to Jack Daniels and Smirnoff and all the other big boys. This explains why some States are so reticent to ease up on arcane restrictions that are hobbling craft distillers. They can’t ease up and give special treatment to craft for fear of being off-side re: Granholm v. Heald.
Get set for more challenges though. The big commercial distillers are intent on getting their product into big box stores (Wal Mart, Costco etc..) without going through the 3-Tier wholesaler middleman. The big boys want distilled alcohol to trade like a commodity item, not like the socially abhorent demon drug that it is made out to be now.
You can be rest assured that right now some lobbyist is having dinner with some politician in Washington and the 3-Tier system is being discussed. I am not sure what will happen to craft distillers if the big boys can somehow sidestep around the 3-Tier system and get product into big box stores cheaper. The Wal Mart model for everything from floor cleaner to cans of tomato sauce says that when things trade like commodities usually the small maker of said products gets squeezed pretty hard.
