The distribution of beer and wine in Ohio is monitored by the state
through what is known as the "three-tier system. The three
separate and independent tiers of the system are composed of:
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Licensed suppliers (brewers & vintners)
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Licensed wholesalers
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Licensed retailers
Value to Consumers
Ohio's three-tier system has far exceeded original goals and
expectations. It has produced a beer and wine market that is highly
efficient and extremely responsive to customer needs and local
concerns.
In addition, the system has helped make beer and wine extraordinarily
competitive: Thousands of small brewers and vintners can enter
our state and offer their products to Ohio consumers.
The choice of thousands or brands helps boost state revenue and
keep competition healthy.
State Revenue
State regulation of the industry has allowed for the collection
of taxes that benefit all Ohio residents. $56.6 million per year
in excise taxes alone are collected from the beer and wine industry.
Tracking sales to and from the wholesaler is how our state is
able to confirm beer and wine shipments into Ohio. This also helps
ensure the proper excise taxes are paid. Consider these benefits
of the three-tier system:
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Strengthens Ohio's liquor laws and the rules of the Liquor
Control Commission.
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Ensures the sale of beer and wine occurs in a controlled
licensed environment which prevents reckless promotions and
curbs sales to underage and intoxicated persons.
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Prevents vertical monopolies in the beer and wine industry
by protecting retailers from direct and indirect control of
suppliers and wholesalers.
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Prevents predatory pricing and dominance of the industry
by a few major players.
Cash Law
For very good, time-tested reasons, the Ohio's "cash"
law requires sales of beer wine and spirits to be paid in full
upon delivery:
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The law protects consumers and keeps a person in one tier
of the distribution system from obtaining and economical stranglehold
on a person in another tier (hence the term "tied house").
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It prevents larger retailers from using credit to gain advantages
over smaller retailers through their market power.
Territorial Responsibility
Suppliers and wholesalers agree with the state that brands should
be assigned to territories, or districts within the state. Responsibility
results in value added to the customer:
Beer and wine products are perishable.
Having only one wholesaler for a brand in a given market
area makes it possible for a manufacturer to guarantee its products
are rotated and replaced.
Efficiency.
One wholesaler for a brand that is responsible for servicing
all retailers in a given are reduces additional distribution
costs.
Accountability.
Accounts serviced by one wholesaler for a brand in a territory
makes it possible for a supplier to accurately measure the level
of service being provided by the wholesaler.
New product introduction.
It is far more likely that new products, as well as existing
ones, will be vigorously merchandised with only one wholesaler
for a brand in a market area.
Territorial responsibility ensures that every retail license
is a given area will have access to every brand of product sold
in that area. This also ensures that consumers have the widest
choice of brands at the largest number of retail locations.
Wholesaler Economic Impact
Direct impact of Ohio's wholesalers:
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5,010 Ohio Jobs.
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$205 million in Ohio wages.
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Nearly 124 million cases of product delivered to 22,000 retailers,
resulting in $56.5 million in excise taxes.
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$3.5 billion in retail sales, generating another $223.1 million
in sales taxes and licensing fees.
The "ripple effect" of our business:
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26,000 Ohio jobs in affiliated industries.
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$788.7 million in Ohio wages.
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$23 billion in Ohio economic activity (employer and employee
spending).
- $186.8 million in state and local taxes.
Economic Impact Data - November 2000
Steve L. Barsby & Assoc., Inc.
Wholesaler Community Impact
Beer and wine wholesalers contribute to their local communities
financially, professionally and personally.
They help build hospitals; raise monies for education and nonprofit
agencies; and support dozens of programs to curb alcohol abuse
and stop underage drinking.
In 1999, WBWAO members founded Ohio and for Responsible Drinking,
a statewide, not-for-profit organization dedicated to promoting
the responsible use of alcohol beverages. Among other activities,
we fund a summer Designated Driver awareness program with the
Ohio Department of Safety and the Ohio State Highway Patrol.
