Much of this article will be written by someone else. But I want to start with self-disclosure. In my opinion, Donald Trump has utterly failed with "making America great again." I'm not going to get into his personal attributes. And I'm not going to fault any players in the bev/al industry. Everyone is simply doing what William Shakespeare said in Hamlet (Act 1, Scene 3):

"This above all: to thine own self be true,
And it must follow, as the night the day,
Thou canst not then be false to any man."

To understand how this affects – negatively, I believe, the alcohol beverage industry – go back to the mid-1980s, If there was one thing bev/al distributors were proud of, it was they built brands. At the annual Wine & Spirits Wholesalers of America convention, wholesalers would sucrry arond to hotel suites to pitch suppliers on how they could best build that supplier's brand.

Wholesalers also lived in fear that a supplier would drop them. And so, they pushed for franchise laws in every state that essentially tied the supplier to the wholesaler. The supplier could still drop a wholesaler, but it would pay a pretty penny to do so.

Fast forward to today. Are wholesalers building brands? The answer began to emerge with the Granholm decision which enabled wineries to ship direct to consumers, if the consumer's home state would permit it. Why did the plaintiff want to ship direct? Simple: It couldn't get distribution. The usual reason was that the volume available was too small for a wholesaler to service.

Since the 1980s, there has been an explosion of craft wineries, craaft distilleries and craft breweries. Once they grew beyond the taproom or tasting room stage, they needed a way to grow their distribution. Direct to consumer shipping was the obvious answer, and they embraced it.

At a certain point – the figure I usually heard for a winery was about 25,000 cases – it would become obvious that one needed a distributor. At the same time, however, large suppliers had their own agenda: They wanted to reduce the administrative costs and hassles of dealing with one or more distributors in every state.

The three-tier system, created under the 21st Amendment, prevented the big supplier from doing his own distribution, so over time large suppliers began forcing the merger of one wholesaler into another. Sometimes they would terminate a wholesaler for performance issues and then encourage favored wholesaler to acquire the loser. In other cases, they would wait until there was a death and then refuse to approve transfer of ownership to the next generation.

Again, there was nothing illegal or even immoral about all of this. Each player was simply doing what was in his own best interest. Variations of this were occurring in other industries as well.

Which brings us to today: The Big Three wholesalers no longer make a pretense of "building brands." They are essentially logistical operations, and they do that well. Do they have sales teams? Of course. But those sales teams are in silos representing a particular supplier. The distributor rep who represents Suntory Global, for instance, won't life a finger for Diageo, even if they are in the same house.

Writing in the Tablas Creek Blog, Jason Haas says he noticed that "in 26 market, we're with one of the "Big 3" distributors. In 2025, those states sold 39% less than the size of the markets would predict. In the 25 markets where we're with an independent, we saw an overperformance of 22%." He notes that Tablas Creek does great in Florida, where it's represented by Breakthru. "But on average we do better when we're in a smaller house."

The reason, he goes on to explain, goes back to compensation. Citing an article by wholesale veteran Alfonso Cevola, How pay-for-performance hollowed out wine distribution, which says "the introduction of pay-for-performance (PFP) instead of the older system of paid on commission (was) the critical moment in which larger wholesalers lost the ability to represent their producers large and small." From the article:

"Under commission, a rep’s income was tied to the breadth of their book. Every case moved was money in their pocket, which meant every wine in the portfolio was worth their time, including the small Barolo producer without a marketing budget, the Etna Rosso that needed a story told. A commissioned rep had financial reasons to know their accounts deeply: which sommelier was quietly building a regional Italian list, which independent retailer would take a chance on an unfamiliar producer if someone spent thirty minutes on the story. Niche products had a pathway to market because the rep had skin in their success.

"PFP replaced that alignment with predetermined goals tied to specific SKUs, funded by supplier contributions to bonus pools. Large suppliers bought their way into the performance metrics. Reps received meagre base salaries – in most major markets, salaries that required a second income or taking on a roommate – supplemented by management-discretionary bonuses tied to pre-selected targets.

"The rational response was to cherry-pick the highest-paying goals and deprioritise everything else. The shopping-list effect replaced the book. A wine without a budget behind it became invisible – not because buyers didn’t want it, but because the incentive structure made selling it economically irrational for everyone in the chain."

It's not, Haas says, that "larger wineries had larger budgets to support the pay-for-performance. It's that in a large portfolio the incentives are structured so that in order to hit them that needs to be the rep's whole focus:"

"The bonus pool mathematics that govern what gets sold cannot be made to work across the full width of a national portfolio in a declining market. Prioritisation is inevitable – and under PFP, it is purchased by suppliers with the largest budgets, not earned by wines with mere market potential. The bigger the operation, the more pronounced the distortion. A regional distributor working 200 SKUs can chase goals and still touch most of its book. A near-national operation working with thousands of suppliers cannot. The ceiling is structural, and it does not expand with the portfolio."

To be sure, Haas says, "Large wholesalers are happy to accumulate brands and deliver them when ordered. But they have set up a system where a rep who goes out and sells those wines is working against their self-interest. "

Again, there is nothing illegal in this. Everyone is simply doing what's in his own self-interest: Suppliers are setting targets for wholesalers who in turn "incent" their sales people to push those large suppliers brands. It also, however, sets the stage for true corruption as exemplified by the bribery cases involving Southern Glazer's Wines & Spirits employees.

Tom Wark, who writes the brilliant Fermentation blog would stop here and call for direct shipping not only by suppliers but also by retailers. I disagree.

These problems go back, not to the three-tier system, but rather to the failure of antitrust enforcers to prevent the sort of mergers and acquisitions that built (and is continuing to build) Southern Glazer's and Reyes Beverage.

Again, I'm not blaming those companies. Their owners and executives are doing exactly what Shakespeare advised: Acting in what they believe to be their own best interest.

I'll ake a look soon – hopefully tomorrow --at where antitrust law has failed not just the alcohol beverage industry, but also the media, banking, healthcare and other parts of the economy. That failure is one of the reasons middle income consumers are having trouble affording "affordable luxuries."