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Retailers sue over Georgia distribution system.

AP--Beer retailers in Georgia are suing the state Department of Revenue, saying its alcohol distribution system has created a network of beer barons who have too much influence over how the beverage is priced and distributed.

"This is a system that's archaic, been on the books for too long and has been defended because, well, I don't know why," said state Rep. Bobby Parham, D-Milledgeville. "Except that you're dealing with big-time money."

For almost 70 years, manufacturers of alcoholic beverages name a single company as a middle man between them and retailers in geographic territories. The distributor can set any price, facing competitive pressure only from other brands.

The beer retailers are to present their argument against the system to a panel of state lawmakers July 3.

"If you don't have state-sanctioned territories and monopolies, competition in the marketplace would force the prices down," said Lou Litchfield, a lawyer handling the retailers' lawsuit in Superior Court.

Indiana operated under a similar system until 1978. Now, the wholesale price for a case of Budweiser 12-ounce cans is as much as 28% cheaper there than Georgia, although different tax rates account for some of that.

Brewers say distributors do more for manufacturers than warehouse and deliver beer. "If he's a good wholesaler, he's a salesman, a merchandising expert and the face of our company in his community," said Mark Wolfe, Anheuser-Busch's senior director of governmental affairs for 12 Southeastern states. Wolfe said smaller retail outlets could be hurt if retailers are allowed to select distributors based on price alone. Distributors would gravitate to big retailers and reduce the services they provide to small operations, he said.

Already, wholesale beer prices vary from one territory to another. A case of 12-ounce cans of Budweiser in Atlanta costs $16.25 and $15.15 a case for bulk purchases of 200 or more.

In Macon, the distributor charges retailers $16.60 a case, and $16.10 on buys of 200 or more. The Athens distributor charges $16.41 a case, and $15.71 for 200 or more.

House Speaker Tom Murphy has created a committee to study alcohol distribution. The panel has met once, and hearings are scheduled for July and August A report is due by Dec. 1.

Georgia is among 32 states that have built systems around licensed retailers and distributors. All but two of them grant exclusive franchises to distributors, said Joseph Lackey, president of the Indiana Grocery and Convenience Store Association. The sale and distribution of alcohol in the 18 other states are controlled by the state government, often with retail purchases confined to state-operated stores.

Revenue officials do not want the system changed. They say distributors do a good job collecting alcohol taxes.
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Publication:Modern Brewery Age
Article Type:Brief Article
Geographic Code:1U5GA
Date:Jul 2, 2001
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