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.