ISSUES
A REGULATORY SYSTEM THAT BENEFITS EVERYONE
Kentucky, along with 31 other states, operates under what is known as the “three-tier” or “competitive/license” model. Under this regulatory model, which establishes important checks and balances to ensure consumer safety, manufacturers may not own distributors or retailers. Similarly, distributors may not own retailers.
Kentucky thrives utilizing this system of checks and balances, which maintains market access and consumer choice, provides public safeguards, ensures proper payment of taxes of hundreds of millions of dollars annually and supports communities across the state. Kentucky’s independent beer distributors are a critical link in the alcohol distribution system that includes brewers and importers, distributors and retailers.
The system prevents vertical integration of the alcohol industry, thereby providing the benefit of a healthy competitive and robust marketplace with tremendous variety for consumers, while ensuring the proper collection of taxes on all alcohol products.
The Three Tier System
KENTUCKY'S CHECKS & BALANCES SYSTEM PROMOTES:
COMPETITION
Preserves a fair and competitive market and ensures access to product that would not be present without these important checks and balances on the system.
TAXES
Kentucky beer wholesalers collect and remit the state beer excise tax, the local wholesale beer tax, as well as assist with proper collection of state sales tax (more below).
VARIETY
Consumers see a higher level of choice thanks to the current system. Without it, one brand could dominate the market space which would lower choices for the consumer and retail outlets.
SAFETY
The current system provides a way to know where the product came from, who’s responsible for it and to whom and where it was sold instilling consumer trust.
Importantly, the same controls that provide accountability in beer sales also ensure that states can efficiently collect taxes on beer. Because distributors can monitor the beer from the time it leaves the brewery until it arrives at a licensed retail outlet, they are best equipped to collect state and local beer taxes. It’s more efficient for Kentucky to collect beer taxes from a limited number of licensed beer distributors rather than from thousands of retail establishments.
COLLECT & REMIT TAXES
Beer wholesales collect and remit the beer barrel tax to the state.
DIRECT BENEFIT TO LOCAL GOVERNMENTS
Beer wholesalers remit the Local Wholesale Beer Tax revenue each month, directly to the city or county where they sell beer to a retailer.
GENERAL INDUSTRY CHALLENGES
BEER SHORTAGES
The global pandemic has created unprecedented disruption to supply chains across numerous industries, and the beer market is obviously no exception. Kentucky’s beer distributors and wholesalers are working hard alongside our brewer and retail partners to ensure consumers have safe access to an extensive selection of quality products. Despite current challenges, the good news is that every day we are still delivering a wide variety of cold, refreshing beer for Kentuckians to responsibly enjoy year-around.
EMPLOYEE SHORTAGES
Like most industries, Kentucky’s beer wholesalers have experienced workforce challenges amid the unprecedented disruptions of the COVID-19 pandemic. Thankfully, each of our member companies have deep and strong local roots, enabling us to attract and retain world-class employees who are dedicated to their companies and to their communities. Stay tuned for more information about available job openings with KBWA members and the exciting career opportunities that exist in Kentucky’s beer wholesale and distribution industry.
INCREASED COST
The beer industry is not immune, unfortunately, to the frequent fluctuations and overall uncertainty of today’s unsettled economic environment. However, KBWA member companies and our brewer and retail partners stand united in the common goal of placing high-quality, affordable products in the hands of Bluegrass State consumers. Throughout the pandemic, we have worked with our member partners to do whatever we can to keep distribution costs as affordable as possible, despite facing many challenges related to rising fuel costs and maintaining our skilled workforce.
ENSURING PRODUCT SAFETY
Ensuring the health and safety of consumers across the commonwealth is the #1 priority of Kentucky’s beer distributors. We work closely with our respected brand partners — both large and small — to guarantee that we are delivering only the freshest beer for patrons of local bars, restaurants and retail establishments to enjoy responsibly.