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Regulators and Industry Attys Agree: 3-Tier System “Works” And A Challenged “Hot Mess” (excerpt)

A “both/and” consensus emerged from this yr’s NBWA-sponsored Center for Alcohol Policy conference.  By and large, govt officials and industry reps agreed 3 tier system “works” to effectively regulate alc bev biz and provide choice.  That’s even while system faces constant, numerous challenges.  Kans Atty Gen Derek Schmidt said flat out “the 3 tier system works.  That’s why no one has heard of it.”  While alcohol policy debates raged across US both pre- and post-Prohibition, that’s no longer the case, he said.  “Absence of controversy now,” outside of industry circles of course, “suggests it works and is supported” by public.  Indeed, NBWA-funded polling shows vast support for current system across geographic/gender/political lines.  Then too, Anoop Bhasin, genl counsel of WVA’s alc bev control admin, also embraced historical “success of 3-tier system,” despite challenges.

Panel Anoop spoke on took up perhaps most serious current challenge to 3-tier: “the changing retail landscape and alcohol regulation.”  Talk turned to cross-tier ownerships and blurring of lines between tiers.  Summing up that topic, Drizly’s genl counsel Nidhi Kumar called it “a hot mess.”  And that’s while Drizly’s considered a chief “disrupter,” even tho it does not sell/deliver alc bevs, but facilitates sales.  In fact, Nidhi complained Drizly now at a “competitive disadvantage because we try to play by the rules.”  Some “edgier” competitors, she charged, “getting away with things” due to lack of enforcement.

On same panel, Colo liquor store owner Bruce Dierking echoed Nidhi, said regulators now focus on “traditional retailers,” but neglect illegal shipments of alc bevs.  But #1 priority of Illinois liquor control comm is illegal shipments/sales, a combo of unlicensed direct shipping to consumers and IL retailers driving to IN and MO for product to avoid IL excise taxes.  So said head of ILCC Donovan Borvan separately.  His state’s ABC code “is a mess” like others’, Donovan also admitted.  That creates big challenges in keeping retailers apprised of trade practice rules.  Back to Bruce and blurring lines between producers and retailers, he also said “Colorado regulations work pretty well,” but lotsa newcomers lack respect for rules and don’t always follow them.  While he “loves his friends” among craft brewers, they can get “greedy.”  Tied-house rules “are gone” if companies can be in all 3 tiers: “Some rules have to apply no matter how cool you are,” he said.  Like other brick and mortar retailers, he expanded “clicks” part of his biz, offering on-line sales.  That biz still less than 2% of sales, but 75% of his “PIAPs, pain in the ass problems.”

Publishing Info

  • Year: 2017
  • Volume: 48
  • Issue #: 17
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The 2018 Beer Insights Spring Conference will be held at the Ritz Carlton Hotel in Chicago on Wednesday evening, 5/16 -  and all day Thursday, 5/17