Thank you, I feel people are scared from wholesale ramifications if they talk opening about the problems the industry is experiencing, and the mandated wholesale channel is unnecessarily constraining the industry. On the retail side it is worse with the wholesale channel not providing "house" branded products to retail chains.
I hear you on the concerns with the three-tier system, especially when it feels like that structure distances wineries from the stories they want to share directly. While the system is federally mandated, which is a separate debate, it’s worth noting the advantages it can offer to smaller and mid-sized wineries. If the three-tier system were abolished, the delta between small and large wineries would only widen, as only larger players could afford the overhead of dedicated sales teams, manage back-end logistics, and hold inventory—all of which come with substantial costs. Also, restaurants work with set payment terms, and your importance to them can dictate if and when you get paid.
For many smaller wineries, relying on a distributor means gaining access to markets and accounts that would be out of reach otherwise. The logistics, administrative, and financial burdens of direct sales can be overwhelming and prohibitively expensive for smaller producers. Our role, as a distributor, is to bring expertise in navigating these logistics, market access, and portfolio management, helping connect unique producers to restaurants and retailers that might never discover them otherwise.
As a midsized distributor, we’re committed to highlighting these distinct stories and ensuring they reach the restaurant staff and end consumers authentically, bridging the gap in a way that’s both scalable and financially feasible for smaller producers. We believe that together, we can maintain those critical connections while providing the structure and support smaller producers need to succeed in a highly competitive market.
Well a couple items "While the system is federally mandated" - the three tier system is not federally mandated. It is a process that was created at the state level from a previous underground distribution system that operated during prohibition. So there is no federal mandate that it exists. Secondly, no one is asking for the wholesale system to go away, it is just states should open up fully the other two channels of direct to trade and direct to consumer. I would agree with you that distributors have a role and an important one, but they should not have a state mandated exclusivity - that is just not healthy. There are lots of brands that cannot get distribution, but accounts want their products and cannot get them. It is pretty un-American to tell either a adult seller or adult buyer than they cannot make that transaction happen. You may have see my thoughts on virtual wholesalers as well, that is an option to solve what is a real issue. It would also help the industry if the attorney's for wholesale did not market the product as "inherently dangerous" - this hurts the industry.
Thanks for the clarification and for the providing a platform for such dialogue. When I referred to the "federally mandated three-tier system," I was speaking more broadly to the constitutional framework established by the 21st Amendment, which empowers states to regulate alcohol distribution. This aspect is indeed rooted in federal authority, as it’s the amendment that allows states to structure alcohol sales as they see fit—resulting in the three-tier system across much of the country. So, while not a strict federal mandate, the system operates within a constitutionally influenced framework shaped by federal permission.
As a distributor, I see firsthand how demand is often driven by products people can't have. It’s a wild dynamic—sometimes, the very exclusivity created by market constraints only increases a product’s appeal, fostering an excitement and demand that would otherwise be less pronounced. I've seen this phenomenon time and again with products that gain a “cult” following precisely because they aren’t available everywhere.
In Washington, DC, for example, buyers actually have the legal freedom to access products from around the world that aren’t formally distributed here. Yet, despite this freedom, the option is rarely exercised. Many accounts still prefer working with local distributors because of the value we add—the personalized service, support, and storytelling we offer around each brand. Our role extends well beyond simply delivering cases; we are here to build a bridge between the producer and the buyer, ensuring products are well-placed, understood, and supported in the market.
At the end of the day, it’s the relationships we cultivate and the education we provide that add real value, often becoming as essential to the sale as the product itself. The three-tier system, albeit imperfect, creates a structured environment for small brands to thrive and for market stability that ultimately benefits both consumers and producers in the long term.
I think there are many thousands of producers and importers would disagree with you. Again, distributors add value to a segment of the market, no reason to stop others from selling as well. Even in states such a California where DTC and self-distribution is allowed, there is still a large use of distributors, so clearly all three sales channels can coexist.
Excellent, Steven, thank you!
Steven--this has been on my mind! You're absolutely correct--we must find a solution. Thanks for a very important "rant"!
Thank you, I feel people are scared from wholesale ramifications if they talk opening about the problems the industry is experiencing, and the mandated wholesale channel is unnecessarily constraining the industry. On the retail side it is worse with the wholesale channel not providing "house" branded products to retail chains.
I hear you on the concerns with the three-tier system, especially when it feels like that structure distances wineries from the stories they want to share directly. While the system is federally mandated, which is a separate debate, it’s worth noting the advantages it can offer to smaller and mid-sized wineries. If the three-tier system were abolished, the delta between small and large wineries would only widen, as only larger players could afford the overhead of dedicated sales teams, manage back-end logistics, and hold inventory—all of which come with substantial costs. Also, restaurants work with set payment terms, and your importance to them can dictate if and when you get paid.
For many smaller wineries, relying on a distributor means gaining access to markets and accounts that would be out of reach otherwise. The logistics, administrative, and financial burdens of direct sales can be overwhelming and prohibitively expensive for smaller producers. Our role, as a distributor, is to bring expertise in navigating these logistics, market access, and portfolio management, helping connect unique producers to restaurants and retailers that might never discover them otherwise.
As a midsized distributor, we’re committed to highlighting these distinct stories and ensuring they reach the restaurant staff and end consumers authentically, bridging the gap in a way that’s both scalable and financially feasible for smaller producers. We believe that together, we can maintain those critical connections while providing the structure and support smaller producers need to succeed in a highly competitive market.
Well a couple items "While the system is federally mandated" - the three tier system is not federally mandated. It is a process that was created at the state level from a previous underground distribution system that operated during prohibition. So there is no federal mandate that it exists. Secondly, no one is asking for the wholesale system to go away, it is just states should open up fully the other two channels of direct to trade and direct to consumer. I would agree with you that distributors have a role and an important one, but they should not have a state mandated exclusivity - that is just not healthy. There are lots of brands that cannot get distribution, but accounts want their products and cannot get them. It is pretty un-American to tell either a adult seller or adult buyer than they cannot make that transaction happen. You may have see my thoughts on virtual wholesalers as well, that is an option to solve what is a real issue. It would also help the industry if the attorney's for wholesale did not market the product as "inherently dangerous" - this hurts the industry.
Thanks for the clarification and for the providing a platform for such dialogue. When I referred to the "federally mandated three-tier system," I was speaking more broadly to the constitutional framework established by the 21st Amendment, which empowers states to regulate alcohol distribution. This aspect is indeed rooted in federal authority, as it’s the amendment that allows states to structure alcohol sales as they see fit—resulting in the three-tier system across much of the country. So, while not a strict federal mandate, the system operates within a constitutionally influenced framework shaped by federal permission.
As a distributor, I see firsthand how demand is often driven by products people can't have. It’s a wild dynamic—sometimes, the very exclusivity created by market constraints only increases a product’s appeal, fostering an excitement and demand that would otherwise be less pronounced. I've seen this phenomenon time and again with products that gain a “cult” following precisely because they aren’t available everywhere.
In Washington, DC, for example, buyers actually have the legal freedom to access products from around the world that aren’t formally distributed here. Yet, despite this freedom, the option is rarely exercised. Many accounts still prefer working with local distributors because of the value we add—the personalized service, support, and storytelling we offer around each brand. Our role extends well beyond simply delivering cases; we are here to build a bridge between the producer and the buyer, ensuring products are well-placed, understood, and supported in the market.
At the end of the day, it’s the relationships we cultivate and the education we provide that add real value, often becoming as essential to the sale as the product itself. The three-tier system, albeit imperfect, creates a structured environment for small brands to thrive and for market stability that ultimately benefits both consumers and producers in the long term.
I think there are many thousands of producers and importers would disagree with you. Again, distributors add value to a segment of the market, no reason to stop others from selling as well. Even in states such a California where DTC and self-distribution is allowed, there is still a large use of distributors, so clearly all three sales channels can coexist.