Brooklyn Brewery’s Steve Hindy Comments On 3-Tier Distribution System

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From the NYTimes:

Almost every state franchise law demands that breweries sign a strict contract with a single distributor in a state — the so-called three-tiered system. The contracts not only prevent other companies from distributing a company’s beers, but also give the distributor virtual carte blanche to decide how the beer is sold and placed in stores and bars — in essence, the distributor owns the brand inside that state….

Nevertheless, state laws continue to empower distributors to select brands and manage them however they want — selling those they choose to sell, while letting other brands sit in their warehouses. The only recourse is to sue, and many small breweries lack even a fraction of the resources needed to take on a big distributor in court. As a result, they’re stuck with the bad distributor, which severely hampers their ability to perform and grow as a business.

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1 comments (click to read or post):

  1. True, but in AZ (and I assume at least some other states) the brewer can pull out of the state for a year, then sign with another, hopefully better, distributor.

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