Amusingly, there's a large California company, Frank-Lin Distillers Products, which has found a way to use the three-tier system in a profitable way. Usually, there are distiller/bottlers, who make and bottle alcohol products, distributors, who operate warehouses and fleets of trucks, and retailers. This results in three levels of markup.
Frank-Lin buys ethanol in bulk, from industrial-scale distillers in the Midwest. The ethanol is delivered in tank cars to the railroad sidings at their plant in Fairfield. There, they take tap water, run it through a deionizing plant to remove dissolved solids, mix it with ethanol, add flavoring, bottle, and ship it out to retailers in their own trucks. Most of the bottom-shelf booze on the West Coast, and some of the expensive stuff (they used to make Skyy Vodka, until Campari bought out that brand) comes from their plant. They make over a thousand different bottled products, but admit that there are only about a hundred different recipes. There are still three tiers, but the markup on ethanol when you buy it by the trainload is very low.
They use a huge number of different bottles, with elaborate designs and labels. Their plant is conveniently located next to a Ball bottle manufacturing plant. They have automated bottling lines which can switch from one product and bottle to another without manual adjustments. This allows them to feed customer illusions about liquor while keeping the manufacturing costs low.
Frank-Lin is moving into wine production.They make "Maestri Chianti", which has decent scores from wine snobs. Same concept, just different bottles and flavoring. Who needs vineyards and wineries when you have an industrial plant and the right formulas? Now that's disruption.
Frank-Lin buys ethanol in bulk, from industrial-scale distillers in the Midwest. The ethanol is delivered in tank cars to the railroad sidings at their plant in Fairfield. There, they take tap water, run it through a deionizing plant to remove dissolved solids, mix it with ethanol, add flavoring, bottle, and ship it out to retailers in their own trucks. Most of the bottom-shelf booze on the West Coast, and some of the expensive stuff (they used to make Skyy Vodka, until Campari bought out that brand) comes from their plant. They make over a thousand different bottled products, but admit that there are only about a hundred different recipes. There are still three tiers, but the markup on ethanol when you buy it by the trainload is very low.
They use a huge number of different bottles, with elaborate designs and labels. Their plant is conveniently located next to a Ball bottle manufacturing plant. They have automated bottling lines which can switch from one product and bottle to another without manual adjustments. This allows them to feed customer illusions about liquor while keeping the manufacturing costs low.
Frank-Lin is moving into wine production.They make "Maestri Chianti", which has decent scores from wine snobs. Same concept, just different bottles and flavoring. Who needs vineyards and wineries when you have an industrial plant and the right formulas? Now that's disruption.