Proposed Beer Legislation Seeks To Loosen the Reins on Texas Brewers

Categories: Brew Blog

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Freetail for retail sale? Supporters of HB 660 hope so.
Hey, I love Texas as much as the next girl, but when it comes to laws the Lone Star State has a reputation for being a bit outdated. And when it comes to alcohol laws, we're downright hard-core. The regulations are particularly restrictive when it comes to beer.

If you head on down to Fredericksburg you can tour a whole slew of wineries, participate in tastings (some free, some paid), and purchase wine to be opened and enjoyed on location or taken home to be uncorked at a later date. The same must be true for breweries, right? Wrong. Under the current legislation a brewery can give tours and serve beer, but beer can only be served on a tour if no admission fee is charged. Even more puzzling is the fact that Texas law explicitly prohibits breweries from selling beer directly to customers, whether it's a pint, a six-pack, or a keg.

If that sounds illogical, consider the brewpub situation in Texas. Brewpubs (sometimes referred to as microbreweries) usually begin as small operations, many with a kitchen to serve food, where beer is brewed, packaged, and sold on site (now-closed Two Rows was a local example). While many other states afford their brewpubs the right to self-distribute or sell their product to a distribution company for resale at retail locations such as bars and grocery stores, the state of Texas only permits a brewpub license holder to sell beer directly to consumers on location - and total annual sales are limited to 5,000 barrels. To put this in perspective, consider the fact that California brewpub Stone Brewing Co. sold over 98,500 barrels in 2009. Sierra Nevada, based out of Colorado, did roughly 800,000 barrels.

What this means is that Texans can walk into Spec's and purchase brewpub beer from almost every state in the union - except Texas. I know. It doesn't make a lick of sense. Luckily, we aren't the only ones who feel it's time for a change. State Representatives Mike Villarreal and Houston's own Jessica Farrar are looking to alleviate some of the restrictions placed on Texas beer with two important bills, filed this session: HB 660 and HB 602.

A brief synopsis of each:

HB 660 - Brewpubs (Mike Villarreal, D, San Antonio)


  • Would amend the current 5,000-barrel sales restriction to apply only to beer consumed at the location or goods sold directly to the consumer by the brewpub.

  • Would enable brewpub license holders to sell their beer to distribution companies for resale at retail locations, up to 75,000 barrels.

  • Would allow licensed brewpubs to directly self-distribute up to 10,000 barrels annually.

HB 602 - Breweries (Jessica Farrar, D, Houston)


  • Would enable breweries to charge an admission fee for brewery tours and provide beer in the form of pints to drink on location or bottles to take home after the tour. However, no additional charge over the admission fee can be applied to beer.

  • The bill would NOT authorize a brewery to sell beer directly to the consumer on-site for on- or off- premise consumption.

The proposed legislation is nothing new - similar versions have been floating around for years, only to be thwarted by powerful distribution lobbies and old-school ideals. Kevin Floyd, co-owner of Anvil Bar & Refuge, provided some insight into the matter. "Of the three-tier system - production, distribution, and retail - distribution is the most powerful," he explains, adding, "Consumers are led to believe that they have a choice when it comes to beer, when in reality the brands on the shelf are largely decided by the state and distributors." According to Floyd, the key to passing these measures is getting the distribution companies on board.

This sentiment is echoed by Brock Wagner, founder of Saint Arnold Brewing Company, who has partnered with distributors in the past to come up with a version of HB 602 that appeals to both parties. On average, more than 1,500 people tour Saint Arnold each week, and roughly 50 percent are visiting from out of town - but under the current laws Saint Arnold can't charge admission or give them beer to take back home. Wagner says, "My goal is for people to visit the brewery, find a beer they like, and I'll send them home with a six-pack in the hopes that the next time they're in the grocery store, that's what they'll buy," adding, "It's marketing, really."

So what do the distribution companies think about the bills? John Nau, President and CEO of Houston-based Silver Eagle Distributors (currently the largest distributor in Texas, and the second- largest in the nation) told us, "Silver Eagle supports HB 602," stating, "We've even worked directly with Brock [Wagner] to perfect the language in past versions of the current bill." HB 660? Eh, not so much. When asked if Silver Eagle was in favor, Nau responded with a decisive "No."

The belief held by many opponents of the bill is that a brewpub impedes upon a system put in place for good reason. In states with laws similar to HB 660 on the books, a brewpub essentially acts as both producer and retailer, and is not required to sell to a distributor - bypassing the traditional three-tier system altogether. And when it comes to the law, Texans don't take to kindly to breaking tradition. Nau explains, "To fully understand the three-tier system you have to look back to the days of Prohibition, when certain persons were participating in bootlegging and other unsavory acts," adding, "You don't want to penetrate that."

It seemed to us that the distribution companies would be all for this bill -- after all, wouldn't it lead to more brands and increased business? It's often cost-prohibitive for brewpubs to distribute themselves, leading many to seek out a major distribution company to get their beer onto store shelves. But to this, Nau said, "At the end of the day, brewpubs are not the instrument to gain distribution in the market." That being said, he did inform us that he had meetings booked in the near future to discuss the matter with the San Antonio brewpubs behind the bill.

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20 comments
Fatty FatBastard
Fatty FatBastard

I'm just infuriated at the blatant copyright infringement that Bat Rastard is attempting to get away with.

My law firm has been notified.

a_king
a_king

BTW, Sierra Nevada is out of Chico, CA... Not Colorado.

Dan Keeney
Dan Keeney

Just a heads up that breweries can and most do charge for tours. They just can't charge for beer served during a tour or allow visitors to leave with beer. HB 602 is makes it legal for brewery tourists to get beer to go.

Kyle
Kyle

When craft beer was in Egypt's land...let my craft beer go.

Matthew
Matthew

already contacted my congress(wo)man about it. free our beer!

Craig
Craig

Brewpubs and their brews are for soft handed Pacific NW folks.

Lauren Marmaduke
Lauren Marmaduke

Yeah, I know. I originally had a Colorado brewpub in there but replaced it with SN - forgot to change the state. However, the underlying message is still relevant. 5,000 barrels is nothing compared to what other brewpubs around the country are putting out. And think of all the money + jobs higher retail sales could bring in for our state.

SirRon
SirRon

While that's technically true, they basically can't charge for the tour. That's why they "sell" you a glass. You should be able to refuse the glass at Saint Arnold and go in for free during the "tours." EOW's Lennie will probably disagree.

HB602 is fine, and I hope it passes, but it doesn't do much for the craft beer drinker. It's not even much of a foot in the door that small breweries, which are actually small businesses, need.

Lmarmaduke
Lmarmaduke

Dan, you're absolutely right - I apologize for the error.

LennieAmbrose
LennieAmbrose

You may find it absurd, but those are exactly the two options the legislature has in front of them right now.

If you have a better idea of what a local rep would have a better chance on getting heard on and, in turn, have a chance of getting passed, then we're all ears.

LennieAmbrose
LennieAmbrose

At this stage in the Texas legislative process and in the current climate with distributors, which of these two bills do you really think would have a better shot at getting passed?

1) A far reaching and industry changing bill that would allow growler sales, change on and off premise rules and would almost force ever packaging brewery in the state to switch their license. It would also worry distributors and thus the big distributors will not get behind it.

Or...

2) A modest bill that allows people to buy a few six packs after a tour

Right now, any change would be positive and I think it is time to be pragmatic. Saint Arnold has had a version of 602 out there for now three consecutive legislative sessions and it hasn't passed yet. Do you think a bill that goes way past that and overhauls the entire system even more has a slim possibility? Believe me though, I hope they both pass, I just think you need to be realistic. Just saying.

LennieAmbrose
LennieAmbrose

I will disagree because that's not accurate. You can refuse the glass, and you can do the tasting for free, but Saint Arnold doesn't have to let you in the tour hall. You are paying for the glass, entry into the beer hall and for the tour. If someone didn't want to pay, they could just stand outside the beer hall and I guess some volunteer at the front could just bring them the samples in a plastic cup or something. I don't know how much fun that would be though.

As far as not helping small breweries, I think it would help them a lot. If a new brewery is just opening and they haven't gotten wide distribution yet, but they do have a good crowd on their tour, folks visiting could elect to upgrade their tour and take some beer home with them. It would be an additional revenue stream for the small business and it would remind the tour visitor what they just sampled so the next time they go into a bar, store or restaurant, they would be more likely to request this new beer they discovered.

Jber
Jber

Craig is obviously a Bud Light drinker, thus his opinion is worthless.

PhilHyde
PhilHyde

As Lennie mentioned, even though the language of the bill explicitly states 48-12oz bottles, I've heard elsewhere from a Saint Arnold PR rep that it will be acceptable to sell in any quantity or packaging not to exceed 576 oz. According to the rep, the need for the specific language has to do with precedent in Texas alcohol laws (didn't really make sense to me, but whatever). This rep also claimed that the bill is as much as blessed by the distributors who don't plan to block it.

SirRon
SirRon

I wasn't aware of the possibility of other packaging, so instead of wanting it to pass, I would like to change my position to wanting it to pass. But now I'm a little less ignorant.

I respect your knowledge bro, even if you are a nazi.

LennieAmbrose
LennieAmbrose

For the record, a brewery can sell an additional amount of beer that is no greater than 48 12 oz bottles after the tour. If a brewery doesn't bottle yet then they could sell a growler with the tour or any other type of package that doesn't exceed 576 ounces. It doesn't have to be bottles or cans so breweries that don't bottle yet would still benefit.

Also, really? You went women's suffrage on me? Were no Nazi arguments available?

SirRon
SirRon

Ha! What is absurd is that you presented those as the ONLY two options available to consumers. It's also weird that you take an unnecessary dig at the non-"Saint Arnold" bill.What is more absurd is that you (possibly intentionally) are not really following along.1. I mentioned that HB602 doesn't do much for the craft beer consumer, but I hope it passes.2. You said it would help small breweries.3. I reminded you that most Texas small breweries don't package their product in 12oz bottles, so they wouldn't benefit at all. I mention for the 2nd time I hope it passes.4. You give your support to the watered down "Saint Arnold" bill and mention the other in a negative way (why not support both?). You do say that you hope they both pass, but then you go negative again.5. I question why you feel like those bills are the only path to success for the Texas beer consumer.6. You ask me for a better idea and remind me that there are 2 bills in front of the legislature, but you call them options (either or?). You then ask me for suggestions.You and I both want these to pass. However, I'm just saying that the HB602 does almost nothing. I also can think of a few reasons why the present day Saint Arnold Brewing Co is really behind it (aside from all the work you guys have done in the past to fight for small breweries... I appreciate that).Here is a suggestion:Breweries should have the same distribution rules extended to wineries.I know... crazy talk, right?One time women didn't have the right to vote. Luckily we didn't settle for just letting them attend town hall meetings.

SirRon
SirRon

I find it funny that your argument is that those are the ONLY two choices. Absurd.

FWIW, I've written my reps on each of the previous "Saint Arnold" versions as well as these.

Still saying.

SirRon
SirRon

What's up Lennie? I knew you would say that. I should have just typed it myself, but I like hearing from you on beer related stuff at EOW.

You should note, many small Texas breweries don't bottle their beers (12oz), so they would not be able to sell their beer during a tour. For the ones that do, how many people are going to upgrade their tour for $50 (?) to bring home a couple cases of beer? 50% of the tour? 25%? 10%? Trivial.

It is also a pretty easy argument that the additional sale does not add much in terms of marketing their beer. If you visit a brewery on a tour, drink the beer, and like it, what difference does it make to the brewery from a marketing standpoint if they can sell you a small amount.

The combination of a relatively small revenue stream , minimal marketing advantage, and the limitation to only breweries that bottle makes HB602 a bill for distributors... and Saint Arnold. I hope it passes and makes Independence Brewing in Austin a billion dollars, but I'm not counting on it. Just saying.

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