An Open Letter to the Texas Craft Beer Industry

Categories: Brew Blog

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Photo by Jimmy Emerson
The Texas Capitol is the site of the current fight for Texas craft beer.
A lot of news has been made of the recent legislation that exited committee earlier this week regarding the Texas beer industry. I addressed the basics of these bills earlier today. While generally positive, reactions in the craft beer community have been noticeably and understandably mixed.

See also:
- New Texas Beer Legislation: What It Could Mean for You

Some folks in more visible roles, namely a handful of brewers, have chosen to take to social media and news outlets to cry foul, to publicly lambaste -- in very broad terms, to a very malleable audience -- the legislation that arguably represents the very best option for change that the Texas craft beer consumer has ever had. Legislation that now hinges as a single piece of law. A single piece of law that breweries are now jeopardizing.

And for what? A ruling regarding distribution rights that was coming down the pipes regardless?

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Photos by Joshua Justice
Up until now, Texas breweries, you have all been happy to be a part of the rising tide that lifts all ships. And let's be clear here for a moment, not every ship in this ocean is as seaworthy as the next. So before you go acting like you just circumnavigated the globe all by your lonesome, let's get a few things straight.

No one forced you to brew beer.

You signed up for this voyage and you did so with full disclosure of what was ahead. A vast majority of you joined up well after the battle lines were drawn and you knew what the odds were from day one.

If you are looking to play for the team that's an odds-on favorite, I am sure Anheuser-Busch will be happy to take you in. If you want to come out on the right side of government legislation every time, go get a job in the banking sector. This is craft beer. This is craft beer in Texas.

You are not alone.

A lot of us have been in on this fight for a very long time. I say "us" because this is a team effort. From the patrons at craft bars across Texas, the office happy hour group at Meddlesome Moth in Dallas and the guys in old lawn chairs out in front of Draught House in Austin to the homebrewers who represent the forefront of creativity and innovation in our industry. From the consumers who have demanded better beer from their retailers to grassroots organizations like Open the Taps fighting in the trenches in the capital. From journalists like Ronnie Crocker at Beer, TX who cover this industry so tirelessly and finally to the breweries that run on the innovation and the sweat and the tears of men and women like you.

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So before you get on your soapbox and call down fire and brimstone, take a look down at the people you are preaching to. They are the same people who helped you build that pedestal you happen to be standing on. Those same people that would follow you to the ends of the earth because -- believe it or not -- they care about you and your product just that passionately. Your words have very powerful and far-reaching implications. So when you get up to preach, be careful with your words. Is what you are saying benefiting them, or just you?

Since you've chosen to be so cynical...

Allow me to join you down in the mire for a moment. Is your ultimate goal now to get the entire package tanked? To sink Texas's chance at viable brewpubs, on-site sales and the all-but-certain growth and revenue that entails so you can assure yourself a chance at a distribution payout before another version of 639 gets rammed through? (And don't kid yourselves, the ban on cash sales of distribution rights is coming in one way or another.)

If that is the case -- and I certainly hope for us all that it is not -- then you don't deserve any of the praise and admiration that I and so many Texans have bestowed upon you. In fact, if it is the case, do us all a favor and be honest with yourself and everyone else and just cash out now.

Up until now, we have been a team.

But now may very well be the time to pick sides. Mine is made up of those who want to fight. My team is for the brewers and the business owners and the consumers who want to see this go the distance. If you are here to cry the first time you get hit in the mouth, we don't want you. Let me rephrase: We don't need you.

In case it's not clear, SB 639 is a punch in the face. Worse yet, as it currently stands, it's a cheap shot. But it's a hit we should be -- at the very least -- proud to take. Do I need to remind you that two years ago, we didn't even make it into the ring?

SB 639 will not stop my team from fighting. I know, in fact, a few who probably welcome this new challenge. I know this will not stop my team from supporting craft beer in Texas. Please do not let it stop you either.

I'm not here to say that this package is a win-win proposition. It isn't. I'm not here to tell you that you shouldn't be angry. You should be. What I am here to say is this: This isn't just about you. This is about all of us. This is about a better way to fight.

Do not think for a second I do not empathize with you or want the very best for you and your employees. I simply want what is best for all of us more. And what's best for all of us is supporting this piece of legislation. What's best for all of us is finding constructive ways to address the flaws in SB 639. What's best for all of us is to continue this war together.

With nothing but love,

Joshua Justice



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29 comments
AustinBaze
AustinBaze

I accept this assessment.  I agree.

Like everything else in the bizarre arcane world of the Texas Constitution, TABC codes and virtually anything that manages to escape the logic sieve that is our state Capitol, progress takes time, and generally requires a "couple steps forward, one step back" approach.  

SB 639 sucks.  Like many TABC codes and many more Texas laws it is almost unexplainably wrong, but if it's a puzzle piece to move the bigger ball forward, let us proceed.  When I moved here brewpubs were illegal.  Then they couldn't fill your growler if they served liquor.  We called things what they were not on beer labels and prohibited listing ABV.  This is an incredibly backward state when it comes to alcohol legislation, but we are not Utah at least.  

The largely anachronistic 3-tier protectionism is entrenched and paid for in the legislature, though parts of it remain useful;  parts of that entrenchment truly threaten to stifle growth in craft beer.   Little things change over time.  Let's accept that a bit more than half a loaf is better than giving bread back.

AustinBeerworks
AustinBeerworks

Hello,

I'm an owner of Austin Beerworks, a self-distributing brewery based in Austin.  

Although I am against SB 639 in principle, I think it's consequences are being misrepresented.  It does not prevent distributors from compensating manufacturers (breweries and brewpubs) for their distribution rights.  It specifically allows for an ongoing partnership wherein a distributor can cover equipment, advertising, and marketing costs for a manufacturer.  What it does prevent is a direct, lump sum payment. 

If I'm not mistaken, Austin Beerworks currently self-distributes more beer than any other brewery in the state.  We would have the most to lose if SB639 truly devalued distribution rights.  

I don't like that SB639 legislates how manufacturers are compensated for their blood, sweat, and tears, but I do not think the consequences of the bill merit action against SB 513-516, which will grant breweries and brewpubs freedoms Texas craft brewers and consumers have been fighting for for over a decade. 

We did not start our brewery with the intention of having a huge payday a few years in.  We started it because we love craft beer and the community surrounding it.  We feel these bills, though not perfect, will be a huge step forward in making that community stronger.  

Michael Graham

Co-Founder

Austin Beerworks


TaitLifto
TaitLifto

What's best for all of us is to wake up to dirty politics and understand the long term ramifcations of 639.  We can reapproach the "good bills" in 2 more years, but supporting this package is a slow death to a large part of a growing industry here in Texas.  In Houston, you're in the shadow of St Arnold and Karbach - BOTH of which already sold distribution rights and aren't affected by 639.  It's easy to be want more for your hometown heros, but there is a lot of great craft beer across the state that would be horrendously affected by SB639.  Don't support it - fight it every last step.  The greater good is bigger.

TaitLifto
TaitLifto

So, Joshua, before you get on your soapbox and tell me this is good legislation, take a look up at the breweries you're preaching to and realize how detrimental 639 is to them.  To us.  The guys that "helped .. build the pedestal" have done great work over and over again, but that doesn't excuse trading away our rights for their own personal gain.  Businesses always build on what came before them, but that's not an excuse to just take bad legislation and swallow it.  I respect Brock and Scott and everyone in the guild, and wouldn't be "fire and brimstone" if it wasn't such a horrid piece of legislation.  There's so much we could've compromised on, but instead distributed breweries and brewpubs come out winners and self-distributing breweries get royally screwed.  It's just the facts.  Antagonizing the situation with these wild accusations doesn't help, Joshua, it just confuses the consumers that don't always know the three tier system and what it means.  That don't realize how the very people that are pushing this through are NOT affected by 639, but they are supposed to represent the huge number of breweries that ARE affected by 639.

TaitLifto
TaitLifto

"Is your ultimate goal now to get the entire package tanked?":  FALSE and TRUE

Was never the goal, but legislation tied all 5 bills together so it's a take-it-or-leave-it deal.  And 639 is not palatable, so we're forced to be against the package when in reality, we're only against 639.  You don't cut off your nose to spite your face, you live to fight another day and 639 is a death nail to many breweries in Texas.  Imagine how much attention a 1 year old brewery would get from a distributor they pay $0 for in comparison to the money the distributors are paying to bring in out-of-state breweries like Firestone, Founders, Odells, etc.  Who gets the attention?  The ones that the money is being spent on, of course.

Tait, Deep Ellum Brewing Co, Dallas TX

TaitLifto
TaitLifto

"You signed up for this voyage and you did so with full disclosure of what was ahead":  FALSE

When we started the brewery, noone told us that distributors would buy politicians to have the law changed to take away our right to receive value in exchange for what we've built.  639 does just that and it was surprise legislation entered in at the last minute that none of us knew was going to happen.  It's like building a house - a nice house with a great lawn, multiple bedrooms, a porch, etc - and then after you buy the house and added on a few rooms, the state suddenly says that you can't sell it but have to give it away.  And, 30% of your rent will go to the people that you give it to.  Those people can sell it if they want, but you can't.  Distributers take about 30% right off the top when they start distributing your brand!  And we're supposed to give our brand to them for free?  Why?  At 75,000 barrels max (current self-distribution limit in Texas) we'd be at the point of having to go with a distributer FOR FREE.  But, just to break even - to bring in the same amount of gross sales that we had at 75,000 barrels, we'd have to do over 100,000 barrels because the distributor is taking 30% off the top.  How do we pay for that increase in production required JUST TO BREAK EVEN? 

TaitLifto
TaitLifto

"coming down the pipes regardless":  FALSE

A rumor has been circulating that 639 was going to happen one way or the other, so why not just get some good with the bad.  Well, first, it's not true - TABC has no plans to shut down brewery rights (or, in other words, free market that we as Americans enjoy Constitutionally).  Karbach sold their rights to Silver Eagle for millions of dollars without so much as a whimper.  But more importantly, when did we become so lazy that we just throw up our hands and say we're going to agree to something because we heard it's going to happen anyway?  If that was true, then Corona, Watson and the big corporate money behind them (Distributers like Ben E Keith and Andrews) wouldn't be pushing this legislation through.  If it really was going to happen otherwise, they wouldn't TIE 639 to the other bills to ram it down our throats, right?  Logic seems to dictate that.  But, instead, Andrews and other distributers paid thousands and thousands of dollars to Carona, Watson and others and - bam - we have 639 being forced on us to get any progress?  No, it wasn't "coming down the pipes regardless", that's just a vicious rumor to get us to roll over and take it.

Tait, Deep Ellum Brewing Co, Dallas TX

TaitLifto
TaitLifto

"represents the very best option for change that the Texas craft beer consumer has ever had":  FALSE. 

While legislation in 515-518 contains some small steps forward in the overall craft brew industry in Texas (while still falling FAR behind most other states), tying it to 639 (yes, they are a package deal - the wording in the bills is all or nothing) creates a backwards movement in the industry.  One step forward, 3 steps back.  Saying this is the "best option" is like saying "it's a dry heat" in the Sahara with no water to be found.  639 is SO BAD that it destroys any good coming from 515-518 if you're a self-distributing brewery.  Breweries like Real Ale, St Arnold, Rahr and Franconia are already with distributers, so they don't lose anything from 639.  But there's dozens of breweries that would.  Freetail is a brewpub, so they gain a lot from 515-518 but lose nothing from 639.  So, yes, you'll hear a lot of rhetoric from companies that are in support of these bills and state that it's a big step forward, but that's because they have no skin in the game on the piggy-back legislation of SB 639. And you should clarify that in your article because having St Arnold come in and claim victory while at the same time selling OUR rights to get THEIR victory is misleading to most without realizing the facts.


Tait, Deep Ellum Brewing Co, Dallas TX

cllake
cllake

Even though as a consumer I like this legislation, I think it is unfair that small breweries bear the brunt of it. The small brewery actually comes out worse in this deal even if, previous to 639, there were obstacles in monetizing this particular right. With the passage of 639 this right will be stripped from them and given to distributors. I would completely understand if small breweries oppose this legislation--most of us would oppose self-immolation as well. Then to ask them to shut up, albeit oh so politely, about it is simply wrong. There was a coalition--let's keep that coalition going by listening to all the members.


SirRon
SirRon topcommenter

"And for what? A ruling regarding distribution rights that was coming down the pipes regardless?" Was it?

Two posts in one day? Good, opinionated posts. It's nice to see that here. But seriously, why so passive aggressive: "Some folks in more visible roles, namely a handful of brewers." Step up and call out the breweries.

BrewFan
BrewFan

@thirdeyeeleven I think you clearly misunderstand Jester King's position.

Someone help me... when did a right that brewers may or may not have ever had become the key to a brewery being successful? Saint Arnold has said they never got paid for their distribution rights, and they turned out okay. 

BrewFan
BrewFan

@TaitLifto you respect Brock and Scott and everyone in the guild... but not enough to believe them when they say this was the best possible outcome given the circumstances? 

Are you suggesting they are disingenuous, or just wrong? I'm not asking in a condescending way, I'm asking so as to frame your perspective and make up my own mind. Before you answer, consider that many of us have seen those two guys fighting for years to better the state of the industry - and now you are telling me that they're either lying to us, or they don't know what they are talking about. 

J.A.Justice
J.A.Justice

@TaitLifto Your logic there is VERY suspect in and of itself regardless of the argument.  Do you have proof it was "just a rumour"?   I'm not saying that it's not a piece of garbage bought and paid for by the beer lobby.  I'm saying that some form of the legislature banning payments was coming and that is a fact. 

J.A.Justice
J.A.Justice

@TaitLifto  I disagree with some of the broad strokes you are painting and outright disagree with others. At the same time I am quick to agree that some of what you are saying is absolutely true. 

 You seem to have missed my main point that whining on the internet without a common concerted message is productive to no one. You know, a concerted argument kind of like the fantastic one you managed to put together here but still have yet to post to a place like facebook, where your angry diatribe from the other night still sits for 18K people to see and be confused by.  The diatribe that comes across to consumers and others as "FUCK YOU, PAY ME" rather than the carefully constructed argument you've managed here.  The diatribe that started unhelpful things like the 5 fan amateur hour "Get Carona Out" facebook page.  

I wanted your input and side of the story and sent messages and emails through the channels available to me, I didn't hear from anyone till today.  I spoke with other brewers in your position and I chose to move forward.

I still strongly disagree with the hamfisted internet posts I've found from a handful of brewers including one laughable threat to take their brand to other states.  I find them disingenuous and showing little or no regard to the consumer.  That remains my point.

I'd love to hear more from you and anyone else about how you plan to constructively move forward from our current situation rather than the idiotic rabblerousing I've seen in public thus far.


J.A.Justice
J.A.Justice

@SirRon you mistake restraint at the sake of greater good for passive aggression.

thirdeyeeleven
thirdeyeeleven

@BrewFan @thirdeyeeleven May or may not have had? Karbach sold their rights for millions. It's a private business transaction. I think the biggest injustice here is that distributors would have the ability to sell the rights to other distros, but the brewery cannot. It's an unfair position. So a distro acquires rights for free, and then can turn around and legally sell them? How's that fair?

trustusjones
trustusjones

@J.A.Justice how is that a fact?  How is legislature banning payment for distribution rights fair when it allows that distributor to sell those same rights and could require the brewery to buy back those rights in order to terminate the agreement?  I agree with @TaitLifto take it or leave it, with the goal to re-introduce the positives at a later date.  Absolutely no reason anyone should be forced to take a giant piece of garbage like 639 in the hopes that the good will outweigh the bad and maybe we can make it better in the future. 
 

Kylejack
Kylejack topcommenter

@J.A.Justice @TaitLifto Prove a negative? This is your piece. Why don't you first explain how you know that sale of distribution rights was going to end regardless. Who said so? And does that person control a majority of votes in the Texas legislature?

rypetxtruthe
rypetxtruthe

@J.A.Justice@TaitLiftoI was under the impression you were the owner of Deep Ellum Brewing Co., sir. Wow. Does your boss know you are writing on behalf of his brewery? I see that Mr. Rearden has been quite vocal on these issues, but you? Your argument has no merit and quite frankly I have no idea what you are blabbing about. It sounds to me that you are creating more enemies than supporters. 

SirRon
SirRon topcommenter

@J.A.Justice Is that what the kids are calling it these days? Don't mistake my comment as not being appreciative is the posts though.

BrewFan
BrewFan

@thirdeyeeleven Is that the old "But officer, he was speeding too!" defense?

Just because another brewery did it in the past doesn't mean it was legal. If Scott Metzger's blog is to be believed (which I believe it is, at least in this situation at a minimum), TABC said they didn't know it was legal and wanted the legislature to clarify.

What's fair is not the issue here. I agree it isn't fair. And I agree it is an injustice. But fair and legal are not the same thing.

I'd be right there with anyone to kill the provisions in 639. They are totally anti-free market. But I believe the people on the inside that this is happening either way... why not get what you can?

JesterKingBeer
JesterKingBeer

@J.A.Justice @thirdeyeeleven Exactly correct.  We support the position of the Texas Craft Brewers Guild and agree with the comments made by both @J.A.Justice and Michael Graham of @AustinBeerworks.  We don't support SB 639, but we strongly support SB 515-518, which we believe will mark a huge step forward for craft beer in Texas, and will do everything in our power to ensure that these bills become law.

Ron Extract
Co-owner/brewer
Jester King Brewery

J.A.Justice
J.A.Justice

@thirdeyeeleven @J.A.Justice We all disagree with 639.  Some have choosen to support the bill inspite of that disagreement.  Jester King is of that mindset.  Deep Ellum is not.

J.A.Justice
J.A.Justice

@trustusjones @J.A.Justice @TaitLifto TABC asked the legislature for clarification on the legality of those transactions.  The ruling was coming and any ruling from a TX legislature is going to favor the distributors.  That is fact now and will be fact 100 years from now unless their lobbying power somehow ceases.

Is that fair?  nope.  it's still what is going to happen 99 times out of 100.

If you choose to not support the bills because of 639 in support of the one brewery who has spoken out against it, that is your choice. Be aware that with the "rights" you are defending for that single brewery, you are stripping rights from 25+ other breweries when you deny them the changes in SB 516-519.  When we don't have better brewpubs in 2 years. (or longer)  thats on you.  When brewers can't sell their beers at tours, thats on you.

So the question is, is Deep Ellums chance at a million dollar pay day worth the rights of 30 (or more) other breweries?

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