What Serious Wine Lovers Need To Know—The Truth
The Three Tier System benefits consumers.
The Three-Tier System provides no benefit to the consumer that they would not otherwise possess from a marketplace without a three tier system.
I believe the truth about this three tier myth is so obvious as to not even deserve mention. Yet the myth is so often passed off as truth that in many quarters it is taken as holy writ. Those quarters usually end up being at beer, wine and wholesaler rallies and in the halls of government where lawmakers regularly visit with the wholesalers the pass them bank checks.
For anyone still unsure, let me explain the very simple three tier system. That so-called system consists of two elements:
1) the three tiers (alcohol producers, wholesaler and retailer) may not possess financial interest or formal control over the other. For example, a retailer may not own a winery. A winery may not own a wholesaler. A wholesaler may not own a retailer.
2) It is mandated by LAW that wholesalers are used to funnel product from producers to retailers in a given state.
That’s it. That’s all. Anything else is an addendum to the regulatory policy of a state and not a basic part of a so-called “three tier system”.
This is all on my mind after reading a press release associated with the most recent annual convention of the National Beer Wholesalers Association that included this nugget:
“the American [three tier] system sets the standard for delivering variety and choice for the consumer like no other system in the world.”
I don’t know about other system in the world, but I do know this about the system used in most states:
1. The three tier system is one that explicitly chooses the middleman over the producer or retailer by forcing both to use a wholesaler in most cases.
2. Whenever it is mandated that a producer of alcohol use a wholesaler to get their product to a retailer in a given state, that state’s consumers has far less variety and choice than it otherwise would have simply because wholesalers have no interest in representing anything more than a small number of producers.
3. If there were no mandate for alcohol producers to use middlemen wholesalers, the wholesalers service would still be available to producers…IF they wanted to use it, thereby forcing middlemen wholesalers to prove their value, rather than having a false value imposed upon the marketplace.
4. In the corrupt, anti-free trade three tier system that mandates the use of a middleman wholesaler, it’s the wholesalers and not the marketplace that gets to pick the winners and losers.
It is no coincidence that when wholesalers tout the benefits that the three tier system gives to the consumer, they don’t explain how the benefits result from the system, nor do they address whether alternatives to the three tier system would give consumers more benefits. Believe me when I tell you that these things are not addressed for one reason: these claims can’t be rationally or logically explained or defended
The problem lies in the fact that wholesaler profits are dependent upon a marketplace system that was put in place to serve a world that no longer exists. To sustain this fantasy world, beer, wine and spirit wholesalers concoct indefensible arguments. What’s further true is that there are those willing to live in this delusional, long-gone world promoted by the middlemen as long as they tangibly benefit from believing the fantasy. But consumers know better. More importantly and more repugnantly, the wholesalers themselves know that the claims they make about the three tier system are untrue. And yet, they make the claims. There is a word criminal psychologists use for this condition.