Our regulatory system is structured so there are three independent tiers: supplier, wholesaler and retailer. There can’t be ownership or favorable financial ties from one tier to another. Or can there? Below is a picture of what is happening around the country. A brew pub that was a local craft brewery is now owned by the world’s largest beer company. It is a brew pub called 10 Barrel. It was started by three guys in Bend, Oregon, a town with a population of 90,000. In 2014, it was purchased by Anheuser-Busch InBev, now a foreign-owned company based in Belgium. With the money ABI has invested, 10 Barrel has been able to expand their brewing and packaging capacity and added a second brew pub in town as well as brew pubs in Boise, Portland, Denver and San Diego. And, some months ago they applied for a distillery license.
The problem is that large corporations are very “bottom-line oriented” because they work for shareholders that expect ever-increasing large profits. That set-up often leads to the problems of the “absentee owner.”
Our experience with local markets dominated by such absentee owners is not good. Before Prohibition, we had the “Saloon System.” It consisted of several large national alcohol companies that owned retail bars called saloons, where almost all alcohol was sold. Most were “tied houses” meaning they could only sell that manufacturer’s products. So, each company had one or more “saloons” in virtually all of our local communities. Since there was little regulation, these companies pushed their retailers to sell alcohol very aggressively. As a result, social problems of excess consumption plagued our communities for many years. These companies not only used their economic power to squeeze out local operators, but used their resources to influence legislators and local politicians. So, our three-tier regulatory system is designed to prevent the problems engendered by the absentee owner operating in all three tiers of the business.