Why Beer Distributors?
Andy Burke

Nearly a century ago, before Prohibition was enacted in 1919, beer distribution in the
U.S. was controlled by the breweries, who exercised great control over retail
operations, to the extent of owning shares in bars and forbidding the sale of
competing brewers' products. Big names included Schlitz, Miller, Best and

Thirteen years of Prohibition killed off many brewers, though some survived by
selling near beer, malt syrup and root beer, among other products. But when
Prohibition was repealed they found their previous power reduced by laws that gave
individual states control over alcohol regulation.

Those laws gave rise to the middlemen known as distributors. Top distributors in the
U.S. today are Reyes Beverage Group, Silver Eagle Distributors, Goldring Holdings,
Ben E. Keith Beverages, Manhattan Beer Distributors, TOPA Equities and Andrews
Distributing Company.

So today, no major brewer can sell directly to a retailer. Instead, the brewer must sell
to a distributor, who is legally bound (though not always followed) to treat all retailers
equally. The upside of this is that most retailers offer a great variety of beers, and
that there are no sweetheart pricing deals. The mere presence of the distributors
limits the power of the mega-brewers. The downside is that the third party in the
chain increases prices to consumers; the middleman is a businessman. Also, some
people  think that the presence of the middleman makes it difficult for fledgling
brewers to get a toehold in the market.

But take a look at the situation in Germany, England, Ireland and other big
beer-drinking countries that escaped the forces of the Temperance movement.
In those countries--just as in the U.S. before Prohibition--the brewers have
substantial power in retail establishments. They may be owners, or financial
supporters, and they typically supply glasses, taps, and other equipment, with the
result that in many restaurants, all the beer comes from one brewer, and your only
choice is which of their styles to drink. As result, people in those countries have fewer
choices among beers than we do in the U.S.

Sure, Germany has some 1,300 breweries producing about 5,000 brands of beer.  
But the vast majority of that beer is consumed locally, near where it is brewed. That
means you always get fresh beer, which is good. But you don't always get much
choice ... and craft beer lovers wnat choice!

The U.S., by contrast, now has more than 1,700 breweries, more than at any time
since the late 1800s.  And thanks to our system of independent distributors, you can
buy many of their brews far from their place of origin.

Even better, in a growing numbers of states, there are exceptions to the old laws,
exceptions that favor smaller brewers. These exceptions allow smaller brewers to sell
directly to retailers and/or the public; to pay lower excise taxes than the
mega-brewers on the first, say, 20,000 barrels; to own retail establishments; and

Granted, the mega-brewers Anheuser-Busch Inbev and MillerCoors still have 80% of
U.S. market, but the smaller brewers are gaining ground.
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In defnese of distributors.