Michigan’s family owned beer and wine distributors are on the front lines of some core issues that affect the citizens of our state – from supporting strong regulations that help keep alcohol away from minors and dangerous products away from consumers to leading the way in recycling and clean fuels to fighting for good-paying local jobs.
The Three-Tier System
Driving Competition, Providing Control, Protecting the Public
The citizens of Michigan benefit from a system of control of alcohol that balances public safety and competition. With roots dating back to the repeal of prohibition, today’s licensed three-tier system results in the transparent and accountable commerce of beer and wine, provides control of the products as demanded by the public and offers tremendous choice at competitive prices.
The independence of each tier (brewers, distributors and retailers) prevents the formation of vertical monopolies and corrupt sales practices in the beer and wine industries. The licensing of individuals/companies who engage in the manufacture, distribution and sale of alcohol, coupled with the enforcement capabilities inherent in such a system, help to prevent sales to minors, drunk driving and excessive consumption.
Historical and Modern Day Benefits to the Three-Tier System:
- Distributors help ensure compliance with Michigan’s laws and regulations relating to the sale and distribution of beer and wine.
- The system creates an efficient framework for ensuring the protection and collection of state excise taxes.
- The system makes the bottle bill work by requiring distributors to pick up empty containers from every retail location in their assigned territories.
- The beer and wine distributor is the link to beverages brought in from out-of-state which need to be tracked through the system in the event of tainted product and the need for a recall.
- The beer and wine distributor creates a paper trail for tracking sales, discouraging “gray market” activity (purchases from unauthorized sources).
- As local community activists, beer and wine distributors work with other local groups to reduce underage consumption and drunk driving.
The three-tier system also creates market efficiencies. The independent distributor has an incentive to maintain a diverse product portfolio and to buy from many brewers for sale to ALL licensed retailers. This gives the consumer the widest of product choices, from the major brands to micro-brewed specialty products at competitive prices.
Beer and Wine Excise Taxes Hurt Lower and Middle-Income Americans.
Taxes on beer account for over 40 percent of the total retail price. Approximately 50 percent of all beer purchased in the U.S. is bought by consumers with household incomes of $50,000 per year or less. The impact of excise taxes is 6.5 times greater on households in the lowest income brackets than on those with higher incomes.
Raising Excise Taxes Will Kill Michigan Jobs.
According to a recent study by the national Beer Institute, Michigan’s beer industry – from producers and the family-owned distributors to the the retailers, restaurants and other local businesses – provided jobs for more than 60,000 people in 2008. Michigan’s beer industry also generates more than $200 million in taxes.
Michigan’s Excise Taxes are the Highest in the Region.
Because Michigan’s excise taxes are already the highest in the region, Michigan businesses are at a disadvantage with other neighboring states. We lose businesses, jobs and even revenue to Ohio, Indiana and Wisconsin. Michigan’s excise tax on beer is 300% higher than neighboring Wisconsin. Raising the tax will only provide incentive for individuals to purchase beer and wine in our neighbor states.
The Michigan Liquor Control Commission has recently warned that smugglers who buy cheaper alcohol in other states rob Michigan taxpayers of millions of much-needed dollars every year – money that pays for critical public services, such as schools and public safety. Raising the beer tax will only worsen the smuggling problem, rob Michigan families of even more tax dollars and hurt Michigan businesses.
Economic Impact: Beer and Wine Distributors
The beer and wine industries contribute significantly to the economies of both the United States and Michigan. Please visit the following website for more information: BeerServesAmerica.org
While the numbers you will find at the above website clearly indicate the significant economic impact which the beer and wine industries have upon both the United States and Michigan, they don’t provide a “feel” for what an average beer and wine distributor in Michigan looks like. The following profile attempts to show just that:
|The Average Michigan Distributor: Investments (Jobs & Wages)
Average number of Employees: 79
MB&WWA Sales: Annual sales (beer, wine, mixed spirit and other)
Economic investment (fleet & property):
Total number of Vehicles: 3,300
Michigan’s beer and wine distributors are among the largest recyclers of cans, bottles and cardboard in the entire state. Every year, Michigan distributors recycle tens of millions of pounds of these materials, keeping them out of our landfills and protecting our Great Lakes, land and air for future generations to enjoy.
How much distributors recycle will vary from one to the other. To give an idea, an average distributor can recycle more than 1 million pounds of cans and between 800,000 to well beyond a million pounds of glass each year.
Michigan distributors are often the largest recyclers in their communities – and it’s a commitment we’re proud to keep.
At the same time, Michigan distributors are also state and national leaders when it comes to using biofuels and hybrid vehicles, which reduces our dangerous dependence on foreign oil. Our commitment to clean homegrown renewable fuels strengthens our nation’s energy security, keeps our dollars here and creates local jobs. One of our distributors was the first in the nation to build a full hybrid-bio-fuel truck fleet. And many distributors use bio fuels to power their trucks and other vehicles.
Michigan distributors are also aggressively investing in energy efficient and sustainable practices at their facilities, from efficient light bulbs to energy efficient coolers to cutting edge new building materials and designs. We’re reducing energy use, greenhouse gas emissions and fossil fuel consumption.
We strongly believe in sustainability, recycling and conservation not only because they help save energy costs – they also all help create local jobs. Distributors often hire full-time employees just for their recycling operations. And energy efficiency and renewable fuels all create American and Michigan jobs, instead of sending them to other states or countries.
Recycling and conservation – good for the bottom line, good for working families and good for Michigan’s future.
Territorial Integrity for Wine
Wine Territory Integrity: Protecting Businesses, Jobs, Fair Play
Under Michigan’s three-tier distribution system for beer and wine, a distributor must be appointed by a wine or beer supplier to service a specific geographic area, or territory, within the state. For all alcoholic beverages except wine, Michigan prohibits a supplier from appointing more than one distributor for the same products in a given territory, thereby ensuring territorial integrity for the State of Michigan and each distributor. The practice of appointing two or more distributors to the same product(s) for the same territory violates territorial integrity, a system that protects consumers, small businesses and local jobs.
Michigan law first mandated territorial integrity for beer distributors in 1976. Legislation mandating territorial integrity for wine coolers and spirit coolers was enacted in 1989 and the Michigan Liquor Control Commission is the “exclusive” distributor for spirits throughout Michigan. This needs to be extended to wine.
The Advantages of Territorial Integrity:
From a regulatory perspective, territorial integrity accomplishes three important public policy objectives:
- Protects consumers from tainted, counterfeit or defective products by enabling the enforcing agency to know exactly who to contact to get a brand removed from a distributor’s warehouse and retailer’s shelves in the event of a product recall.
- Simplifies the audit system and the enforcement of trade practice violations. State regulators know exactly who is responsible for selling a particular brand to a retailer in a given area and can determine how much of the brand is being sold, the prices being paid by the retailer, the terms of sale and if the appropriate taxes are being paid.
- Allows suppliers and state regulators to guarantee that every retailer, regardless of size, has access to every brand and package variety of products sold in that market area on a timely basis. This ensures that consumers have the widest choice of brands and packages at convenient locations, thereby enhancing competition, strengthening local businesses and protecting jobs.
Wine distributors should be treated the same as beer, wine cooler and spirit cooler distributors. As proven in the over 30 years since legislation was passed giving beer distributors territorial integrity, such a law promotes inter-brand competition, consumer choice, product integrity and tax accountability, while upholding the spirit and intent of beer and wine wholesaling franchise laws and protecting local businesses and jobs. It is time to protect the territorial integrity of wine distribution and pass laws that level the playing field and ensure everyone follows the same fair rules.