How wholesalers power three-tier beer in Georgia

How wholesalers power '3 tier beer'

ATLANTA -- In the next few weeks, new regulations are expected from the state that will allow Georgia's craft beer brewers to distribute small quantities of beer to customers at their breweries.  It's part of a fight that's been underway for more than a year – and has its roots in political power, tradition, and the lifting of prohibition nearly a hundred years ago.

By the time a frosty beer gets to the mouth of a paying customer in Georgia, it has gone through the rigors of regulatory structure obliquely called "the three tier system." And at the state Capitol, that system is sacrosanct.

 

"There's a lot of history behind the three tier system," said Nancy Palmer, director of the Georgia Craft Brewers Guild.

"The industry is structured a certain way, and all the power and the money exists and is used to keep it that way," said Rep. Buzz Brockway (R-Lawrenceville).

Tier one is the brewers.  And with the rocketing popularity of craft beer, there are now some forty brewers in Georgia.

Tier two is the wholesalers – the distributors with the warehouses and the beer trucks. 

Tier three is the retailer – the liquor store, supermarket, bar and restaurant that sells beer to consumers. 

State law protects the three tier system, so that no beer producer can sell beer to a customer without first getting it to a wholesaler, who then delivers it to a retailer.  Similar structures are in place for wine and distilled spirits in Georgia.

"This provides a safe and certainly regulated way to control how alcohol is sold in this state," said Rep. Billy Mitchell (D-Stone Mountain).

So when brewers asked lawmakers to pass a bill that would have altered the three tier system, it roiled the Capitol. The bill would have allowed brewers to sell small quantities of beer directly to brewery visitors– cutting out the wholesalers, and putting their lobbyists to work to stop it.

"There is a tremendous amount of money that moves from Georgia beer wholesalers to legislators," Palmer said.  "And it's an amount of money that my brewers couldn't possibly even begin to get around to donating."

How much? Followthemoney.org says Georgia's beer wholesalers have given more than $1.1 million in campaign contributions over the last 21 years – most of them to incumbent Georgia politicians running for re-election.  Some of the biggest political players got the most money.

  • Senate majority leader David Shafer: $12,800
  • House Speaker David Ralston: $13,925
  • Former Gov. Sonny Perdue: $20,606
  • Gov. Nathan Deal: $23,200
  • Former Gov. Roy Barnes: $27,350
  • Lt. Governor Casey Cagle: $27,400

The campaign money "buys them the opportunity to communicate to their legislature. You build relationships and those relationships are so very important," Mitchell said.  But he quickly added that the money does not buy votes.

Georgia's beer wholesalers are one of many old-school big-money players in the Capitol's lobbying corps – in a system where money and power are traditional partners.  The wholesalers declined an interview but said in a statement:

We believe the three tier system performs extremely well as it is the most reliable and accurate method of collecting state and local excise taxes. Additionally, the system ensures consumers have access to the widest variety of products and allows brewers of all sizes to be successful because of the marketing and distributing agreements they have with their wholesale partner. Thus, we are committed to working with state legislators and officials to ensure the system remains the best for both the industry and consumers, while also partnering with brewers, as we have done in the past, to guarantee the continued growth of the Georgia beer industry for years to come.

Yet there are signs the three tier system may be wobbling. "I think the three tier system is antiquated. It's anti free market and it needs to be dismantled and removed immediately," said Sen. John Albers (R-Roswell).

The question is whether a burgeoning industry – craft beer – can shift a foundation that's been in place for nearly a century. 


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