Craft brewing is a unique industry in America, not just for its creative, bold products, but also because of the regulation of its distribution and sales, which keeps alive its independent, local spirit amid intense monopolistic forces.
Just how important is wholesale distribution to craft beer? For starters, it was a key in ending Prohibition. Many blamed the deplorable state of the alcohol industry and consumption pre-Prohibition on vertical integration. After it became clear that banning alcohol sales was no answer, the 21st Amendment was constructed and a key tenant was the establishment of a third tier that kept alcohol producers from selling directly to the public or retail outlets. Voila, distribution saved alcohol in America. Fast forward to 2013, and it is still a key factor in spreading the wares of more than 2,500 craft beer producers in the country.
A report by the Markets, Enterprise and Resiliency Initiative of the New America Foundation in 2012 drove this point home, noting that brewing is at least somewhat protected by true monopoly thanks to its three-tier distribution system. The effectiveness of this system and its enforcement across the country definitely varies, and some might argue that through deregulation efforts and loopholes, the system hasn’t lived up to its real promise to prevent the total dominance of Big Beer.