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The southeastern region of the United States has a peculiar relationship with alcoholic beverages. Southern states such as Kentucky and Tennessee have a long history of whiskey production. The south is also the home of many conservative Baptists that view alcohol consumption as being immoral. The result of the ethical opposition has been the formation of dry counties and onerous laws governing alcohol production and sales. Presenting more opportunities for interest groups (Bootleggers) to find ways of strategically gaming the system from multiple points of the supply chain (p.386). Often the Bootleggers, operate as a source of backdoor funding for morally justifiable policy campaigns (Regulation Magazine, Vol 44, No.1, p.14-15). The geographic “chessboard” strategy of keeping dry counties adjacent to wet counties dry is far from the only approach deployed by various interest groups (p.397).

Another strategy used by business interests in the south’s beer industry is regulatory capture. A means of leveraging market power to mold regulations to the benefit of corporations; is a typical extension of soft-political power used by corporations throughout the United States. States such as Georgia have long prohibited direct-to-customer sales from breweries, historically referred to as tied-house (p.390). States that have permitted self-distribution by smaller brewers since 1978 have seen more growth in craft breweries (p.392). These restrictions date back to the legally sanctioned distribution arrangement of tiered distribution systems. In this system, beer is distributed to retail outlets via a licensed distributor. Favored by larger breweries such as Pabst and Miller since the market share they lost in the years before the Volstead Act from smaller breweries self-distributing their beer (p.390). The reason why bigger breweries still favor these archaic laws is that they would rather not have to compete with the dizzying array of microbreweries for shelf space (p.395).

However, has the moral argument of limiting direct sales reduced the instances of problematic drinking held up to scrutiny? That would be resounding no. Empirically, restricting direct alcohol sales has had little influence on overall alcohol consumption (p.399). It also should be noted that craft breweries have stronger connections to their communities. As stated by the executive director of the Georgia Craft Beer Guild:

“….I would like to think that craft breweries, because of the community connection, aren’t nearly the threat to intemperance that multi-nationals are, or Wal-Mart…”

11 thoughts on “Bootleggers and Baptists XXXIII- The Three-Tiered Distribution of Beer in the “Bible Belt”

  1. Before becoming a law professor (back when I practiced law full-time), one area of practice I had was distribution agreements between distributors in Puerto Rico and manufacturers in the US mainland, and one aspect of Puerto Rico law that directly impacted these distribution agreements was a law which prevented principals (i.e. the manufacturers) from terminating a distribution agreement without “just cause”, which often led to costly litigation.

    Liked by 1 person

        1. Depends on what criteria you choose to use. The objectives guiding initiatives for alcohol regulations, are a dismal place to start.

          In the case of the Baptists (in every sense of the phrase), the optimum amount of alcohol consumption is zero and insensitive to the correlation of volume consumption and societal harm.

          Odds are moderate alcohol consumption will lead to very few negative externalities. From the standpoint of political utility, the definitions of problematic drinking are relatively immaterial. Unless one is debating means of reducing healthcare costs. Even then a top-down incentives program to curb excessive drinking would still fail to achieve its aims.

          This is a question best left to physicians and psychologists.

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        2. Solid points.

          It appears, at least for the Baptists, that favoring such regulations is about expanding their dogma (despite that, for most people, moderate alcohol consumption is not particularly injurious). Moreover, as you noted, these regulations are not apt to deter alcoholism much. Perhaps they should stick to using the pulpit?

          And yes, I should probably take up your point and inquire elsewhere for answers to my question 😉

          Great work!

          Liked by 1 person

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