On this Prohibition Repeal Day, cheers to wholesalers who help keep your alcohol safe
Charles George, Opinion contributor
Dec. 5, 2019
Eighty-six years ago, America adopted the 21st Amendment, ending one of the most disastrous social experiments in our nation’s history: Prohibition. In addition to establishing states’ rights to regulate alcohol, Americans could now toast the holiday season with wine and spirits that were both safe and legal.
Since then, states have worked diligently to balance consumer demand against the social sensitivities of alcohol, a balance struck by the “three-tier system,” which puts the public’s health and safety at the forefront, promotes responsibility and accountability across every level of the alcoholic beverage industry and keeps counterfeit products out of the marketplace.
Within the three-tier system, responsive to technological advancements and the consumer, there is built-in accountability – alcoholic beverages safely move between licensed producers, wholesalers and retailers. Most are familiar with the producer tier (e.g., our cherished distillers) and the retail tier (e.g., your favorite bar or liquor store) -but far fewer are aware of the immense impact of the wholesale tieror its benefits to Kentucky’s bourbon boom and the wider economy.
Together, Kentucky’s 45 licensed wine, spirits and beer wholesalers and distributors employ some 2,500 people across the commonwealth, paying out more than $160 million annually. These are high-paying jobs, averaging almost $70,000 annually -nearly triple the state’s average income.
Only the retail tier – across more than 8,000 different on-premise (restaurants, bars, sports and entertainment venues) and off-premise (package stores) locations – employs more Kentuckians. And despite the name, wholesalers and distributors are doing a lot more than just moving products from point A to point B.
Wholesalers offer a variety of services to their partners in the producer tier and customers in the retail tier, including marketing and sales support for producers and retailers, wine list development for bars and restaurants and wine-tasting and mixologist programs for servers and bartenders looking to improve job skills and enhance the customer experience.
Wholesalers also serve as a single clearinghouse and logistics resource for more than 36,000 different alcohol products in Kentucky alone. Largely thanks to the three-tier system, the U.S. selection of products is globally unprecedented. Wholesalers are particularly proud of their role in highlighting the newest craft products, whose growth is in some ways tied to the level playing field wholesalers preserve.
Beyond creating jobs and supporting small businesses, the wholesaler tier plays a much larger role in the overall safety and efficiency of the industry, too.
Headlines reporting U.S. tourists dying or falling ill from illicit alcohol from the U.K. to Mexico and India to the Dominican Republic are a reminder of what could happen without our system. In fact, the concerns of counterfeit and illicit alcohol became so serious that the U.S. State Department opened an investigation and issued a warning to American travelers.
At home, 46 state attorneys general, including Kentucky’s, signed a letter to Facebook and Craigslist demanding they stop allowing alcohol sales on their platforms, creating opportunities for counterfeiters and facilitating underage access. Thanks to the three-tier system, such incidents will hopefully never claim a life here, or adversely impact the industries of alcohol and tourism.
Requiring that licensed Kentucky retailers purchase their products from licensed Kentucky wholesalers and distributors, who in turn must document that those products originated from licensed producers – in Kentucky or around the world – ensures a safe and secure supply chain. In the event of a product recall or other risk to consumers, wholesalers can take swift action to remove products from retail locations.
This is made possible thanks to highly sophisticated inventory tracking and management systems, as well as local relationships, ties to the community and industry knowledge, which help wholesalers collect tax revenue, while ensuring alcohol is sold as intended. Each year, Kentucky’s wholesalers and distributors collect and remit some $150 million in taxes to the commonwealth, with another $120 million collected by retailers.
So, while consumers may not notice wholesalers on their next night out or stop at the corner liquor store (look for the alcohol-branded trucks), the dedicated Kentuckians in this tier are working hard every day – for you. And there’s no busier time for wholesalers than the holidays.
So, as you raise your glass with family and friends during this holiday season, take a second to raise another to the three-tier system and the wholesalers and distributors who bring it all together. Cheers!
Charles George is the executive director of the Wine & Spirits Wholesalers of Kentucky, which represents the interests of wholesalers and distributors across Kentucky, promoting policies that support a safe marketplace, responsible consumption, and continued growth for the alcoholic beverage industry in Kentucky and beyond.