Damn I needed a drink anyway

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Three-tiered is just another word for rip-off, or maybe price-gouging, or at best, overly-inflated profit margins.

WSJ.com - Court Ruling Could Cut Prices For Beer, Wine America's beer and wine tab may be about to shrink.

In a little-noticed ruling last month, a federal court in Seattle struck down key parts of the state's beer and wine distribution laws that the state acknowledged resulted in higher prices to consumers. The laws, which ban volume discounts and the purchase of beer and wine on credit, were challenged by bargain-basement chain Costco Wholesale Corp.

The ruling, which is being appealed, could spill over into the rest of the country because most states have provisions similar to Washington's.

The Costco case follows a decision last year by the U.S. Supreme Court that paved the way for some consumers to buy wine directly from winemakers. Taken together, the two cases could result in lower retail prices for beer and wine. They also could presage a big shift in the complex three-tiered system that has governed the sale of alcoholic beverages in most states since the 1933 repeal of Prohibition.

...If the Costco ruling is upheld, Costco and similar big-box retailers will benefit in a number of ways, most likely at the expense of middlemen. Not surprisingly, the ruling set off alarms in the beer and wine industries. “It's threatening to distributors,” says Carlos Laboy, an analyst for Bear Stearns who follows the beer industry.

Distributorships, many of them family-owned, have profited for generations under the protections afforded by three-tier systems. During the Costco trial, several beer distributors testified that their typical profit margins on beer were about 26%. If Costco prevails, those margins are almost certain to be squeezed.

Squeeze away, baby.

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1 Comment

Thank goodness. "Cheap" wine is getting expensive 'round these parts!

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This page contains a single entry by Seth A. published on May 11, 2006 3:32 PM.

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