Raise a Glass to What Works Can’t wait to try the new seasonal beers at the restaurant down the street? You can thank distributors for the wide variety available to you. Distributors work with brewers big and small to cultivate varied and vast selections for their clients, which means a better, diversified beer selection for everyone. “More than 120 brewers ship beer into Iowa, plus another 70 more make beer in Iowa. Distributors are proud to display tremendous portfolios of local, regional, national and international beers. If there’s a demand for the beer, there’s a wholesale beer distributor willing to work with the brewer,” said Cooper, citing Peace Tree and Exile as two of the many Iowa brewing companies who work with distributors. Doll believes this tiered system works, especially if you look at the economics of the U.S. and Iowa beer market. “We have products from down the street to across the world in many of the retail establishments the consumers visit, and we’ve seen a massive expansion of craft breweries across the U.S. and Iowa. This industry has succeeded under the three-tier system,” said Doll. In comparison, Doll explained, countries like Mexico or European nations are places where craft breweries have little access to the overall market. As the head of an association that is focused on providing equal distribution access to both macro- and micro-level brewers, Cooper can attest that the system allows micro-producers a level of access unmatched in any other retail sector. “The last decade has shown that it’s easier now to start a brewery than at any other time in American history,” said Cooper. “There are more breweries than ever: 70-plus in Iowa and more than 4,500 nationwide and counting.” Yet, Cooper is not blind to the challenges the beer industry in Iowa is facing overall; he cited Iowa beer consumption peaked in 2008 and is falling.
Hops vs. Vodka “Iowa’s three-tier system applies to all types of alcoholic beverages, but you see more beer distributors because the volume is much larger,” said Cooper. He explained that the state of Iowa is the wholesaler for liquor, and “every bottle of liquor sold in Iowa must be shipped to a central state warehouse in Ankeny to be taxed and distributed.” In this, Iowa’s not alone; there are 17 “control states” in which the state has a distribution or retail monopoly on liquor. Doll stated that many of the alcohol industry principles are the same across state lines “to ensure the customer has product in stock and in code.” The main differences are the different state laws. For example, in Minnesota, strong beer sales on Sunday are illegal; in Nevada, liquor can be sold at supermarkets and convenience stores; and, in Pennsylvania, wine and liquor can only be sold through 600 state-run stores. Safety Precautions Even though most don’t know about the three-tier system, it’s important to the quality of the beer. Because distribution companies are independent, they have to maintain state and federal licenses, which means transparency, accountability and a certain standard of safety. Doll explained that wholesalers ensure the product they represent is safe and hasn’t been recalled by the producer. “In other countries, that is not the case, and people have died from tainted alcoholic product because of no regulation,” said Doll. Plus, companies in the alcohol industry pay some hefty state and federal taxes. In Iowa, that results in $2.43 in state and federal taxes generated for every case of beer sold! Along with paying taxes, distributors serve as excise tax collectors of the money that is then used to pay for state and community programs. CONTINUE >>
“Most people don’t believe me when I say that, but it’s true,” he said. So we’ve got more brewers than ever and falling demand. It’s a very competitive marketplace, and much of that is directly attributable to the three-tier system. But we’d be hard-pressed to find major deficiencies in this system.”
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