Three-Tier System [Alcohol Distribution] Law and Legal Definition

In the chain of alcohol distribution, there is a three-tier system which was set up after the repeal of prohibition. The system was started to distribute alcoholic beverages in the U.S. The three tiers of the system constitute producers, distributors, and retailers. According to the system, a producer must sell to a distributor who must then sell to a retailer. The benefits of three-tier system are:

1 It enables states to track the actual movement of alcoholic beverages from the producers and importers to consumers through licensing requirements and legal obligations.

2 It checks, balances eliminate the economic incentive for illegal manufacturing, diversion and distribution of alcoholic beverages.

3 It benefits consumers from the healthy competition and facilitation of a wide selection of brands in the marketplace