The three-tier system creates a variety of problems for a variety of entities.

Alcohol Producers are harmed because…

-Under the three-tier system they are restricted from selling directly to retailers and restaurants in the state. 

-Under the three-tier system, producers are required to sell to wholesalers, but a state’s wholesalers are not required to represent producers. This means producers’ access to a state’s market can and often is restricted by the whims of wholesalers

Retailers and Restaurants are harmed because

-Under a three-tier system, retailers’ potential inventory is heavily restricted. They have access to only a small percentage of the alcohol products available from producers and importers nationwide since they may only purchase inventory from wholesalers who historically only offer a very small percent of the products available nationwide

-Under the three-tier system, retailers end up competing with one another on prices, rather than being able to compete on a diverse offering of products since all retailers in a state are purchasing from the same wholesalers.

-Under the three-tier system, retailers often have no access to small, family-owned producers since they are not represented by their state’s wholesalers.

Under the three-tier system, retailers can easily be manipulated and coerced by the state’s wholesalers, particularly if the wholesalers in the state are dominated by very large companies that control the distribution of the most popular wines and retailers must deal with these large wholesalers—providing them with no leverage or options.

Consumers are harmed by the three-tier system because

-Their access to hundreds of thousands of alcohol products, particularly rare, hard-to-find, and small-production products, are not represented by their state’s wholesalers and therefore are not offered by their state’s retailers.

-Under the three-tier system products are often much more expensive due to the existence of a wholesaler where one may not be necessary, yet the wholesaler adds an additional markup that may not be necessary.