Wine Industry Distribution Channel Overview in the Us

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Wine industry distribution channel overview:

In the wine world today, wine producers must understand that there are three ways that their product can get to the end consumer. First, the consumer may buy the wine from a retail store such as a wine boutique or online store such as, both examples implying that the consumer drinks it at home or another residence. Second, the consumer can buy wine in at a place of consumption such as a wine bar or restaurant and drink it on the premises. And lastly, third, a consumer can buy wine directly from a producer either in person, such as in a tasting room or by mail order, such as in a wine club. (From this point on when retailer is mentioned, it refers to any business that sells directly to consumer, i.e. wine shop, restaurant, online wine store, etc.).

In the In the United States, there is a unique distribution system, which resulted from the aftermath of Prohibition. Commonly called the “three-tier system,” it says that producers sell to distributors, distributors sell to retailers, and retailers sell to consumers. Consumers are sometimes considered a fourth tier, but most wine industry professionals only refer to the three tiers, as it is the “pipeline” of wine into the mouth of a consumer. Generally speaking, Selling alcohol in the United States is a highly complex business. To understand the alcoholic beverage laws across 50 states would require extensive research, but for the scope of our project, the important take away is that in different states, there are different laws. Some states require that producers of alcoholic beverages must use the three-tier system. In those states, wine producers, by law, can only sell their product to a distributor. In other states, such as California, for intra-state sales producers are not mandated to work with distributors. However depending on the size of the producer it may or may not be advantageous to work with a distributor, which we will discuss....
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