Frequently Asked Questions (FAQ)

What is the three tier system?

The three-tier system is the model of social responsibility. Suppliers, wholesalers and retailers all play a crucial role in providing outstanding choice and availability, while protecting the integrity and quality of alcoholic beverages.

Why do we need a three-tier system?

The system creates a framework of regulations, which mandates responsibility and accountability in beverage alcohol distribution.

Consumers benefit from the three-tier system every day through lower prices and greater selection. Boutique distillers and wineries are able to get their products to a wider range of outlets, and small retailers have access to a greater variety of product at lower prices through wholesalers.

Disrupting this regulated chain would have disastrous ramifications on public safety and marketplace stability.

What are the tiers?

1) Suppliers – producers of wine and spirits such as wineries and distilleries
2) Wholesalers & Distributors – Wholesalers purchase wine and spirits from suppliers to efficiently distribute to retailers
3) Retailers – A variety of stores, as well as restaurants, bars, stadiums and hotels, that sell wine and spirits to consumers for consumption


What is the difference between a wholesaler and a distributor?

A wholesaler purchases the wine and spirits from the producers.
A distributor delivers a variety of of producers products directly to the retailer. 

Why do we need the middle tier? Why can’t the product go directly to the consumer? 

Vertical integration would benefit only large-chain businesses. And while it might encourage lower prices on select, mass-marketed items through big-box stores, it will cost the consumer, other players in the market and state governments in the end. Prices will likely increase; retailers will be driven out of business; innovation will decrease; consumer choice will be limited; tax revenues will decline; state regulatory expenses will increase; and jobs will be lost.

Review the rules and code regulating the alcoholic beverage industry in Texas