How Looser Regulation Gave D.C. Great Specialty Bars

A blog about business and economics.
Sept. 19 2013 1:16 PM

How Looser Regulation Gave D.C. Great Specialty Bars

78605959
ALAMEDA, CA - DECEMBER 21: Well, do you?

Photo by Justin Sullivan/Getty Images

Washington, D.C. isn't particularly known for good government practices or a commitment to free markets but one area where the city has things right is the world of wholesale alcohol distribution. The vast majority of jurisdictions in the United States saddle retailers with the elaborate three-tier alcohol distribution system whereby a bar may not buy product directly from a producer. Exceptions are frequently made for brewpubs selling their own wares, but if you want to sell a bottle of liquor or a keg of beer from some other state, then you have to find a middleman who wants to sell it to you.

That greatly reduces the range of products that are available, and can raise prices by limiting competition and inserting extra layers of profit-taking. As Jessica Sidman explains in the City Paper, D.C.'s lack of such a system is helping to spur the rise of niche bars that go deep with a very long list of some particular spirit. She cites absinthe-focused Libertine, tequila-focused El Centro, rum-focused Hogo, whiskey-focused Jack Rose, sherry-focused Mockingbird Hill, etc.:

Part of what allows D.C. bars to build such large inventories are its unique alcohol import laws, which make it possible to obtain bottles directly or from outside distributors if they aren’t available from D.C.-licensed distributors. That’s not possible for bars in Maryland, Virginia, and elsewhere in the country.
Advertisement

An important point about this, it seems to me, is that when you make it logistically easier for bars to stock obscure products you create opportunities to increase the skill profile of the bartending occupation:

In addition to flights ($12 to $25) to show off a spectrum of different styles of rum, [Tom] Brown relies on bartenders to guide drinkers toward brands that are better than their Bacardi standby but have the same price tag. The same is true at El Centro, where bartenders must go through a two-week training, at the end of which they’re tested about the products, the production process of tequila and mezcal, and the regions where the spirits are made. In addition, all the bar managers will soon take a tequila sommelier class.

As I've said before, policymakers need to start taking food service seriously as a sector of the economy in which large numbers of people work. Creating more opportunities for differentiation, competition, and upskilling is part of the path to more jobs and more opportunities. The three-tier system originally came about as a consequence of prohibition. But if policymakers want to curtail problem drinking (which they should) the reasonable course of action is higher alcohol taxes. That targets the issue much better, and instead of generating rents for booze distributors generates useful revenue.

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

TODAY IN SLATE

Medical Examiner

The Most Terrifying Thing About Ebola 

The disease threatens humanity by preying on humanity.

I Bought the Huge iPhone. I’m Already Thinking of Returning It.

Scotland Is Just the Beginning. Expect More Political Earthquakes in Europe.

Students Aren’t Going to College Football Games as Much Anymore

And schools are getting worried.

Global Marches Demand Action on Climate Change

Politics

Blacks Don’t Have a Corporal Punishment Problem

Americans do. But when blacks exhibit the same behaviors as others, it becomes part of a greater black pathology. 

Why a Sketch of Chelsea Manning Is Stirring Up Controversy

How Worried Should Poland, the Baltic States, and Georgia Be About a Russian Invasion?

  News & Politics
Weigel
Sept. 20 2014 11:13 AM -30-
  Business
Business Insider
Sept. 20 2014 6:30 AM The Man Making Bill Gates Richer
  Life
Quora
Sept. 20 2014 7:27 AM How Do Plants Grow Aboard the International Space Station?
  Double X
The XX Factor
Sept. 19 2014 4:58 PM Steubenville Gets the Lifetime Treatment (And a Cheerleader Erupts Into Flames)
  Slate Plus
Tv Club
Sept. 21 2014 1:15 PM The Slate Doctor Who Podcast: Episode 5  A spoiler-filled discussion of "Time Heist."
  Arts
Television
Sept. 21 2014 9:00 PM Attractive People Being Funny While Doing Amusing and Sometimes Romantic Things Don’t dismiss it. Friends was a truly great show.
  Technology
Future Tense
Sept. 19 2014 6:31 PM The One Big Problem With the Enormous New iPhone
  Health & Science
Bad Astronomy
Sept. 21 2014 8:00 AM An Astronaut’s Guided Video Tour of Earth
  Sports
Sports Nut
Sept. 18 2014 11:42 AM Grandmaster Clash One of the most amazing feats in chess history just happened, and no one noticed.