What’s the three-tier system?
How does American Market work?
As you know the USA is the largest market in the world. It is also a very big country which makes it hard to cover for one company. This is why the American Market is composed of many intermediaries. But that’s actually also the law. And that’s called: the Three Tier System. (it dates back from the prohibition).
The Three Tier System makes it an obligation to have 3 ”tiers” intervening in the sales of alcohol.
FIRST tier: The producer can sell Only to the SECOND TIER: Distributor who then sells to the THIRD Tier: retailer before it reaches the consumers.
Foreign producers also need to go through importers or distributors with importing licenses. This system is true (almost) everywhere in the country. Washington State allows retailers to purchase directly from producers BUT since the 3 Tier is so popular most of them work with distributors.
Many States allow producers to sell directly on site which is the case in California. All the tiers end up, adding up to the final cost which is why most imported wines are usually much higher in the US than in their home country (on top of logistics costs of course). For all the winemakers out there, make sure to calculate a little margin for everyone when calculating your final price.
Cheers ! 🥂
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