Prohibition is one of the most peculiar chapters in American history. Arguably, it is single handedly responsible for destroying the American beer scene – leaving a small number of large brewers to essentially run a monopoly for many years to come. Therefore, when I heard about a fascinating exhibition touring the US called American Spirits – The Rise and Fall of Prohibition – it naturally made me think a little more about the effects of prohibition on the US drinking scene.
Prohibition, of course, was actually a complete failure. If anything it mostly succeeded in creating a seedy underground crime network and a culture of corruption. It is, however, significant, and I would argue it’s one of the key differentiators between the US and Britain when it comes to beer.
The key here is what happened to America’s small brewers; all of which were effectively wiped out as soon as the 18th Amendment (Prohibition) came into play on January 16th 1920. Larger brewers found ways to stay in business by adapting their facilities to manufacture alternative products. Pabst Brewing Company, for example, made Pabst-ett cheese while other brewers made ice cream. Some breweries even switched to producing alcohol free beer, which perhaps unsurprisingly didn’t really catch on. Instead, brewers such as Anheuser-Busch found more success in producing perfectly legal malt syrup, which was inevitably used to make beer at home.
By the time prohibition was finally repealed in 1933, the devastation of America’s brewing scene had practically turned the country into a beer desert. In fact. the damage was so immense it would take until the mid-90’s before the number of breweries in America would return to pre-prohibition levels.
I won’t go into the full history of how and why prohibition came to be – you can head over to the exhibition website for that – but what I will say, is that America had a huge drinking problem prior to prohibition (to be honest with you, so did Britain at the time). The difference in America was the formation of the Temperance Movement, whereby a group of angry farmers from Connecticut formed a society which would eventually lead to the passing of the 18th Amendment.
The Legacy of Prohibition
Aside from the dramatic reduction in brewing competition, prohibition had many other significant impacts on the US beer scene from bar culture to consumer distribution – the basics of which I’ll try to cover as briefly as I can:
Before the whole thing kicked off, American Saloons were run much like many British pubs; breweries made exclusive agreements with saloons to ensure they would only sell their beer in exchange for the company providing glassware and furniture. In the UK, this is known as a tied pub, and they still exist today. In post prohibition America however, this type of setup can no longer exist due to the creation of a three-tier alcohol distribution system.
The three-tier distribution system was set up to separate brewers from consumers, and it’s the reason brewers can no longer deal direct with Saloons or customers. Instead, they must go through a middle man in the form of a distribution business. While it might have seemed a good idea at the time, the result is incredibly bad for competition and consumer choice.
The reason for this is fairly simple really: with the majority of America’s small brewers devastated by the dry years of prohibition, the small remaining big players were able to grow so big that they’re effectively operating a monopoly. Quality no longer mattered, and increasingly, American beer became weaker, thinner, and with higher proportions of cheap, cost saving ingredients.
For me, it is somehow ironic that a country founded on free-market principles actually has a less competitive beer market than the UK, which has typically had more socialist policies through-out the 20th century.
Unlike America, British brewers are free to sell beer direct – even through their own websites if they so wish – and ultimately this leads to more competition and better consumer choice. On the other hand, across the pond, it is ironic that the distribution centers set up in the US to protect consumers are now unable to ignore the money and influence of the big players and this has a disastrous impact on competition. Britain, of course, has it’s own quirks, such as the beer tie, but the effects of such powerful brewers – combined with the three-tier system – are arguably far more profound.
What I’ve covered above is just the basics; for a more comprehensive lesson on the effects of America’s quirky three-tier system, I would highly recommend watching the movie Beer Wars. The film is a documentary, narrated by industry veteran, Anat Baron reporting on the state of America’s beer industry and the struggle of smaller craft brewers to survive in the face of such huge corporate power. The latter half, covering distribution and the efforts of industry heavyweights who lobby government to maintain the status quo is particularly revealing.
Beer Wars is also available in the UK at this link
Craft Beer movment – against all odds
The whole scenario of post-prohibition America – and the shadow it casts – makes the US craft beer movement all the more impressive. With everything stacked against them, a relatively small band of dreamers have taken on the big brands and are beginning to win the battle for America’s taste buds.
It’s truly a testament to the entrepreneurial spirit of a nation. But you have to ask – how much better could it have been if prohibition never happened? The beer scene in America – and arguably the world – would probably be very different. It also leads one to wonder how big it could be if market forces were left to do their thing. Would consumers make different choices? As long as the three-tier system exists, I guess we’ll have to keep on dreaming.
What are your thoughts on the effect of Prohibition? Let us know in the comment box.