Three-tier (alcohol distribution)

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The Three-tier system of alcohol distribution is the system for distributing alcoholic beverages set up in the United States after the repeal of Prohibition. The three tiers are producers, distributors, and retailers. A producer must sell to a distributor who must then sell to a retailer.

States have various exceptions to this rule, the most prevalent one being the case of a brewpub, which is simultaneously a producer and retailer, and has no requirement to sell to a distributor. Some states allow an entity to have a part in two of the tiers, letting small breweries act as their own distributor, for example. In the wine industry, many states permit wineries to sell bottles of wine on-site to customers, and some states, such as Oregon, permit intrastate shipments of wine directly from the producer to the customer.[1]

Usually producers will give a distributor exclusive rights to market their product within a geographical area, so that there will not, for example, be two distributors of Anheuser-Busch products competing against each other.

Rules also vary according to what kind of relationships each of the tiers can enter in to with the other two tiers. So for example a producer may not be allowed to give promotional items or services to a retailer. A beer distributor might be responsible for setting up and maintaining draft lines in a restaurant, or may be legally prohibited from doing so, depending on the state.