Tied House

The term comes from the UK, where a “tied house” is a pub that’s required to buy all of its beer from one specific brewery. Why would anyone agree to this?

Well, starting in the US during the mid 1800s prospective saloon owners were offered tied house deals, in exchange for the brewery helping get the business off the ground. In the short term, this seemed like a good deal, as many Americans didn’t have access to the amount of cash needed to start their own establishment.

However in the long run, one of the issues that emerged from this system was a lack of consumer choice. And for the saloon owners, these deals were often structured in such a way that they could never get out of them, and effectively became owned by the brewery itself. This was a major issue, and the tied house system was outlawed as part of Prohibition.