VWBA

The 21st amendment gives states the right to regulate the manufacture, distribution, sale and use of alcoholic beverages. Most states utilize a 3-Tier System, which balances multiple and sometimes conflicting interests to ensure transparency and fairness for all parties. Vermont is a 3-Tier System state.

The first tier in the 3-Tier System is the Supplier. The supplier manufactures the product. This is your local brewery for example. The supplier ensures the product is fresh and made to the highest standard.

The second tier are the Distributors that make up the Vermont Wholesale Beverage Association. The distributors ensure the suppliers can get their products to market and that retailers have access to any product they wish to sell. Distributors drive the competition that lowers prices, spur innovation and selection for consumers, provide entry for new products to the market – particularly for smaller suppliers such as microbreweries – collect and remit taxes and operate the bottle redemption program or “bottle bill” for the State of Vermont.

The third tier are the Retailers that sell to consumers. The retailers are split in to two groups – on-premise and off-premise. On-premise retailers comprise restaurants, taverns, bars, nightclubs and ski areas. Off-premise retailers are the grocery, convenience and general stores. Retailers provide consumers with access to their favorite products and are one of the staples of the Vermont tourist economy.

Vermont’s Beer and Wine Franchise Law protects consumers and provides them with the widest variety of choice, access and responsible beverage sales. It ensures the 3-Tier System is transparent, reliable and safe.

Beer franchise laws encourage distributors to make the investments necessary to expand distribution of new craft brands and allow new brewers with new products to enter the market through independent distribution. This results in the widest possible selection of beer and wine for the customer. Beer and wine franchise laws also prohibit brewers and wineries from terminating agreements with distributors for taking on new brands. This prevents forced consolidation and combined with the 3-Tier System prohibit vertical integration and the creation of monopolies that would limit consumer choice.

Beer franchise laws promote distributor investment in new brewers and markets. This is one of the reasons the craft beer market has grown so rapidly. The distributor provides warehousing, equipment, trucks, merchandising, advertising and promotion to small operations that would not otherwise have access to those resources. It also ensures rural retailers have access to a wide selection of brands and fair distribution opportunities, which allows them to compete with larger, more urban retailers.

The beer and wine franchise law ensures compliances with alcohol and tax laws and promotes responsible sales and marketing by the industry. It ensures a transparent chain of custody and that all participants in the market are licensed and regulated.

The Bottle Bill was initially implemented in Vermont in 1974 as a litter reduction program. Beer distributors have been operating the bottle deposit system in Vermont for nearly 45 years and are responsible stewards of our products and the environment. Over the years the bottle bill has grown into a recycling program that provides local markets with reusable material. Vermont’s bottle bill covers spirits, malt beverages, soft drinks and other carbonated beverages.

While Vermont’s bottle bill is effective in terms of high recovery rates of PET, aluminum and glass beverage containers, it is very costly to maintain. The Agency of Natural Resources commissioned a report in 2013 that found the existing bottle bill costs all parties, including distributors, consumers, redemption centers and the state over $11 million to operate every year.

In addition to the high costs, there are other significant problems with Vermont’s bottle deposit system. These include fraudulent bottle returns and nontraditional entrants into Vermont’s beer and wine markets from direct shipping by out-of-state Internet retailers and manufacturers, which make the system even more costly and penalizes local businesses. More details about the problems with the existing bottle bill can be found in recent testimony from a VWBA member to Vermont’s Single-Use Products Working Group. (SEE ATTACHED TESTIMONY)

Given the high cost, fraud and other problems with the bottle bill, the state should consider alternatives that would better use our resources to focus on all products, rather than just beverage containers. Doing so will get a better environmental bang for the buck. VWBA members welcome the opportunity to work with the state and other stakeholders on alternatives to the bottle bill that will increase recycle rates, generate funds for investments at Vermont’s solid waste recycling facilities, have a greater environmental benefit, be less costly for Vermonters and good for Vermont’s economy.