Marriott’s Soda Switch Highlights Alcohol’s Different Rules

When Marriott International recently switched its beverage supplier from Pepsi to Coca-Cola across nearly 10,000 hotels worldwide, the move drew attention because it showed how quickly a large company can make a single, centralized decision in the nonalcoholic beverage business. One contract negotiation can change what is poured in hotel rooms, restaurants and meeting spaces around the world. In wine and spirits, the system works differently, and that difference is central to how alcohol is sold in the United States.

The contrast has renewed attention on the three-tier system, the structure that governs alcohol distribution after Prohibition. Under that framework, producers, wholesalers and retailers operate as separate tiers, with state laws adding rules that vary by market. The system was built to prevent any one company from controlling too much of the marketplace and to keep competition active at the local level. Supporters say it also helps protect public health and safety by creating oversight and limiting direct control by suppliers over retail outlets.

In practice, alcohol producers cannot simply lock up a national chain with one exclusive deal in the way a soft drink company can. Independent wholesalers compete to represent brands and then compete again for shelf space, menu placement and service at bars, restaurants and stores. Retailers choose what to carry based on customer demand, not on a single supplier’s terms. A store may decide to stock only certain labels, but alcohol brands generally cannot require exclusivity across a retailer’s shelves or force purchases beyond a single transaction.

That ongoing competition is one of the main reasons the industry is structured this way. In nonalcoholic beverages, most of the competition happens before a contract is signed. After that, access can be closed off for long periods. In wine and spirits, competition continues every day through wholesaler service, sales execution and investment by suppliers trying to win attention from distributors and retailers.

The system has particular importance for smaller producers and independent retailers. Family-owned wineries, craft distillers and mid-sized brands often rely on wholesalers to reach consumers in different states and communities. Retailers, meanwhile, retain the ability to build selections around local tastes rather than being tied to one supplier’s portfolio. Trade practice rules are meant to keep brands from excluding rivals from shelves and menus.

The issue matters now because the beverage alcohol market is under pressure from several directions. Consumption has slowed in some categories, consumer preferences are shifting, inventories are tight in parts of the supply chain and consolidation among suppliers has increased. Those changes have prompted calls in some quarters for a closer look at distribution rules. But any move away from the current structure would come with trade-offs, including less competition at the local level and fewer safeguards against concentration.

For more than 90 years, the three-tier system has remained a defining feature of alcohol regulation in the United States because it balances commercial interests with public responsibility. Unlike other consumer goods categories where exclusive contracts can quickly reshape what customers see on shelves, alcohol distribution is designed to keep choice open, accountability visible and market power divided among separate players in each state and community.