An important question in both marketing and economics is to understand how costs are passed through different vertical structures and different products to final consumers. However, casual identification of these relationships has been problematic. First, the vertical structure of most channels is endogenous to the retail final price observed. Second, commodity cost shocks which are often used to proxy for cost changes are often noisy measures of actual cost changes making it difficult to identify the true effect. Finally, most previous research considers the impact of vertical structure and product differentiation in isolation without considering the combined effect of both. In this research, we investigate the impact of both vertical structure and product differentiation on price passthroughs. Using the retail beer industry in the U.S as context, we leverage differences in regulations across states that mandate different vertical structures along with changes in excise tax to assess the impact on pass-throughs. Using a difference-in-difference strategy, we find that less integrated vertical structures and lower quality products exhibit lower passthroughs and that there are significant interaction effects between vertical structure and product differentiation. We conclude with implications for firms and policy practitioners.