Supplier Purchasing or “Self Distribution” refers to the practice of wine retailers purchasing some portion of their inventory directly from the producer, whether in state or outside their state of operations. The vast majority of states prohibit wine retailers from purchasing wine directly form out of state producers, instead forcing them to purchase their inventory from in-state wholesalers that supply only a tiny portion of products available across the country. NAWR opposes this prohibition on supplier purchasing wherever it exists as an archaic and unjustified restriction on retailer operations and due to the extraordinary restrictions in places on free markets and consumer access to legal products.
The numerous state prohibitions on supplier purchasing is a relic of the era immediately following repeal of Prohibition when most states put in place distribution laws generally referred to as the “Three Tier System”. Under this system of distribution of wine and spirits, retailers are only able to purchase inventory from wholesalers, who in turn on the only business entity legally allowed to purchase wine from producers and to sell to retailers and restaurants.
The differences between the wine and spirits marketplace in the 1930s when the Three Tier System was put in place in most states and today are huge. There are exponentially more products, far more consumers of wine and spirits, enhanced logistic and delivery options and technology, and new methods of communications that put retailers and consumers in instant contact with producers and product information.
The still legally mandated three-tier system and prohibition on direct supplier purchasing by retailers no longer properly serves the American wine and spirits marketplace, nor consumers. Rather, the mandated three tier systems has evolved into a system of protectionism for a special interests that have been enriched by the very same system at the expense of economic freedom and free markets for the entire wine and spirits industry and consumers.
Regulatory reform of the state mandated distribution system is needed. NAWR supports progressive reforms that even the playing field for retailers, restaurants, producers, wholesalers and consumers.