Prost! Selling German Beer to Americans

But there is more to exporting beer than simply finding somewhere else to sell it. Brewing and selling beer locally in Germany avoids a lot of unrealized problems. Dornbusch understands the new set of problems that shipping and marketing beer German brewers face when they try to sell their beer to customers that live two continents and an ocean away. These problems include spoilage, packaging and marketing, and the maze of legal issues associated with selling alcohol in the US.

The distributor system that plays a key role in selling alcohol in the US is unique in the world. Dornbusch says that it is an “alien creature” to overseas brewers. This system is a result of the strange history of alcohol in the US: that love/hate relationship that Americans have had with alcohol from the beginning. This odd relationship culminated in Prohibition when a grassroots movement eventually led to a swell of public demand for a national prohibition against liquor, which was immediately and consistently violated by a huge portion of the citizenry.

A favorite whipping boy of the anti-alcohol crowd was the network of bars and taverns known as tied houses. Tied houses, which still exist in many other countries including Germany, are establishments that serve alcohol and are beholden to specific breweries. Often this arrangement grows out of the brewery financing the establishment’s startup costs and supplying almost everything needed to run a bar from the booths and lighting fixtures to the glassware and welcome mat. The laissez faire capitalism and new shipping technologies of the late 19th and early 20th centuries unleashed monstrous breweries on US cities in a winner takes all battle for territory marked by a tied house on virtually every corner.

These tied houses were true dens of iniquity. Picture every Starbucks serving exclusively Bud, Heineken, or Guinness and where with a wink and nod one can get into the back where gambling, prostitution and virtually anything else are freely available. This might be something of an exaggerated vision of the reality but not of the perception of the Prohibitionists.

When Prohibition was repealed it was not simply a return to the status quo. Lawmakers felt that there needed to be a way to prevent a return to the tied house system. It allowed too much control by the breweries. So, the distributor system was born. To be sure, distributors had always existed but this new system was a new construct. It provided a clear buffer between the brewery and the retailer and it eliminated the possibility of a return to the tied house system. As a result, US distributors today wield a great deal of power; far more than mere shipping companies which are the closest to the distributors’ equivalent in other countries. In most cases they are able to control what beer and alcohol products are sold in a particular area. To muddle the situation even further laws governing distributors are different in each state.