By David White
The opinions expressed are his own.
Warren Buffett’s Berkshire Hathaway recently purchased Tennessee’s largest alcoholic beverage distributor. This move comes just months after Berkshire Hathaway also acquired liquor distributors in Georgia and North Carolina.
This is a bad sign for consumers. It’s yet more proof that America’s anachronistic system of alcohol distribution is here to stay. This system — which exists only because of government regulations — stifles consumer choice and keeps prices artificially high.
The laws that keep consumers away from alcohol date back to prohibition. When the “Noble Experiment” was repealed in 1933, states were given the power to regulate alcohol within their borders. Some chose to take over the sale and distribution of alcohol. But just about every other state created a “wholesale tier” to sit between producers and consumers.
In part, this was at the urging of temperance activists and retailers. Prohibitionists blamed producers for all the ills associated with drunkenness. Restaurants and liquor stores didn’t like the power that producers could wield. By creating a middle tier, lawmakers hoped to weaken the influence of brewers and distillers. Instead, they simply made wholesalers incredibly powerful.
Southern Wine and Spirits, America’s largest liquor distributor — and one of the nation’s largest private companies — had revenues of nearly $8.5 billion in 2008.