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LESSONS OF HISTORY The alcoholic beverage industry has been a major part of the American economy since colonial days. One of Thomas Jefferson’s first acts as President was to repeal a federal whiskey tax, stating that “an excise tax on distilled spirits is hostile to the genius of a free people.” Congress did not dare tax alcohol again until the Civil War. It was the revenue from the income tax that made Prohibition possible. But Prohibition was a spectacular failure. The saloon was replaced by the speakeasy, a free market was replaced by an ocean of corruption and organized crime flourished. By the presidential election of 1932, both political parties were committed to repeal. |
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To America’s lasting benefit, however, some of the lessons of history were learned. Prohibition was initially popular because the
alcohol industry was out of control. In pre-Prohibition days, brewers, vintners and distillers often sold their products through
their own retail outlets, called “tied houses,” using any marketing means possible to sell excessive amounts of their product
(including the infamous “free lunches” laced with salt).
Generally, each tier must remain independent of Generally, each tier must remain independent of the other two. Every manufacturer must sell through a licensed wholesaler, and every retailer must buy from a licensed wholesaler. With very limited exceptions, including Virginia's Consumer-Direct Beer and Wine Shipment Law, manufacturers cannot sell directly to retailers or the public. They cannot own retail outlets. Virginia's wine and beer wholesalers are strong supporters of the Three Tier System as a mechanism for maintaining product choice, regulatory control and tax collection.
BENEFITS OF THE THREE TIER SYSTEM The Three Tier System effectively requires the alcohol industry to consist of a large number of competitors. Those engaged in distribution and retailing are mostly small businesses and virtually all are located here in Virginia. Thus, they are easier to regulate than huge, remote conglomerates, some of which might be located overseas. This helps ensure that every product sold in Virginia pays its fair share of Virginia taxes, collected by the licensees themselves. Most importantly, since the distribution tier cannot be controlled by manufacturers, it is relatively easy for new products to enter the industry and gain market access through such independent distributors. Witness, for example, the Virginia craft-brewed products and wines that have arrived in the marketplace in recent years and enjoy considerable consumer appeal. The Virginia Winery Distribution Company, established in 2007 by the General Assembly, is an example of how the three tier system can accommodate change. The VWDC, a unique public-private partnership, works with wineries and wholesalers to provide market access for products not already enjoying robust distribution. The Three Tier System also provides "rules of the road" that guarantee consumer choice and competition by restricting unfair competition:
Any way you measure it, the
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![]() ALCOHOL AWARENESS & RESPONSIBILITY Virginia's beer wholesalers believe that education, public awareness and community service are key components in the prevention of alcohol abuse. At the same time, the Virginia Beer Wholesalers Association has consistently supported policy decisions of the General Assembly and ABC Board that emphasize moderation and the responsible use of alcoholic beverages.
PREVENTION - Vigilant action in the marketplace to:
TRAINING - A vigorous marketplace presence to:
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