In the political polarization of today, it’s refreshing to learn about Democrats and Republicans joining forces to achieve a common goal – more so when the issue is one that is close to every Texan’s heart: Beer.
Next week, the Texas Legislature will begin hearings on Senate Bills 515, 516, 517, and 518. If signed into law, this bundle of bills would open the burgeoning craft beer market by easing the regulations surrounding how breweries give consumers access to their beer.
Under the current laws, Texas consumers have two options to indulge in the innovations of craft breweries. San Antonio is fortunate to have opportunities for both.
Freetail Brewing Company, is a local brewpub. Through their model, Freetail brews and sell beers by operating like a restaurant. They can sell their beer on the premises but cannot distribute it. Ranger Creek Brewing and Distilling operates as a microbrewery. They offer brewery tours and beer tastings but cannot sell their suds on their premises, and it is sold only in bars, restaurants, and grocery stores. Freetail and Ranger Creek both face challenges when trying to distribute their products to consumers, which stifle their growth.
TPR’s David Martin Davies moderated the event. Panelists included Tim Campion, Vice President GLI Distribution; Scott Metzger, Owner of Freetail Brewing; Travis Poling, Author, “Beer Across Texas: A Guide to the Brews and Brewers of the Lone Star State;” and District 123 State Representative, Mike Villarreal. Freetail Brewing and Bluestar Brewing Company both provided samples of their brews to a sold out crowd at Hermann and Sons.
Davies opened the discussion by calling for an end to the Texas tyranny regulating the craft beer industry. Metzger articulated the predicament facing local breweries: “I could literally sell more beer in Texas if I moved out of Texas.”
To be sure, this poor economic model hinders growth for craft beer brewers.
“Because of Texas restrictions, we really lag the rest of the country in this developing, emerging segment of the beer industry, which is really the only growing segment of the beer industry,” Metzger told the audience.
In the economic turmoil of 2013, Texas can ill afford to continue to thwart innovative industries like craft brewing.
Craft beer advocate groups including the Texas Beer Alliance and the Texas Craft Brewers Guild work as catalysts for support of changing Texas laws. They both support the Senate four-bill bundle. Their grass roots efforts have endured, but the greatest strides towards comprehensive reform are recent. As Villarreal pointed out during the panel discussion, there is power in numbers.
Proponents of microbreweries and their unique suds must generate enough support for the legislation to ensure its passage, especially because their adversaries have deep pockets.
“The laws are essentially a guarantee for some businesses to incur a profit … without a lot of risk and without a lot of competition,” Villarreal told the audience. Despite support from craft beer advocates and their breweries, not all parties support the four-bill bundle in the Senate.
As Villarreal explained, with all opposition, there is a “good reason and a real reason.” Illustrating the good reason argued by the opponents of reform, he held his sample cup high over his head, saying, “This is a dangerous substance.”
No doubt, with the ubiquitous reminder to drink responsibly, regulating craft beers is important. However, the real reason present in the opposition has less to do with benevolence and more to do with concern over large distributors not wanting to lose their sizeable share of the market. Campion condemns this mentality as short sighted in the face of a changing market. Campion cheers the innovation emerging in small breweries and believes legislative reforms will benefit all parties in the long run.
The loudest voice against the pro-microbrewery legislation emanates from the Wholesale Beer Distributors of Texas (WBDT). The WBDT supports Senate Bill 639, which among other provisions, would require uniform pricing for breweries selling to distributors.
Metzger stated in his Brewed and Never Battered blog, “This is self-serving protectionism at its most blatant.” Indeed such meticulous regulation seems counterintuitive for freedom-loving Texans consistently crying out against the threat of big government. Mark McDavid, co-owner of Ranger Creek, pointed out that craft breweries and their enthusiasts “support legislation that frees the markets to be more competitive, and this legislation is a step in the opposite direction.”
San Antonio locals can take pride in the roles their state legislators have played in furthering the craft beer movement through supporting bills like House Bill 1763 and the four bills bundled in the Senate. Rep. Villarreal was an early supporter of legislation to ease the restraints placed on microbreweries. In the Senate, Leticia Van de Putte is a co-signer of the four-bill package. At the most recent count, fourteen bipartisan senators, including Van de Putte and multiple Republicans, pledged their support for the bills.
Small Batch Series No. 2 by Ranger Creek was the only Texas beer to make Draft Magazine’s Top 25 Beers of 2012 list. States with laws more favorable to craft breweries, like Colorado and California, held multiple slots. Texas and specifically San Antonio are poised to nourish a growing craft beer industry through a combination of local consumers and tourists, but only if the legislature changes.
The Texas laws governing craft breweries have changed little since their adoption decades ago, some of them as distant as Prohibition. In 1993, laws changed to allow for brewpubs like Freetail to exist, but little progress has evolved within the last twenty years. The craft brewers were not the first industry to challenge the antiquated Texas laws governing the sale and distribution of alcohol. In 2001, after a battle spanning an entire decade, Texas wineries finally passed legislation enabling them to sell wine on their premises.
Unfortunately, craft brewers like Ranger Creek and Freetail still meet with mystified looks from consumers visiting their locations. Ranger Creek hosts a quarterly Open House where patrons sample beer. Visitors frequently request to purchase the brew to take home, but Ranger Creek cannot sell their beer at their brewery. Similarly, the guests at Freetail ask where they can buy the product outside of the brewpub. Consumers are disappointed again; Freetail can only sell their beer on their own premises.
Regulations like this do not exist in any other industry. Imagine if big Texas oil companies could not distribute and sell the oil they pump. These laws regulating beer divide stakeholders into three tiers: manufacturers, distributors, and retailers. Under this segmentation, there is little room for overlap between brewing beer and distributing it to consumers.
Initially, the Three Tier System intended to guarantee no brewery could dominate the beer market, but in application, it limits the opportunities for craft brewers to dispense their products to consumers and continue to develop the growth available in other industries. Even so, the craft beer industry in Texas has managed to emerge quietly into an economic strength.
According to the Texas Craft Brewers Guild, craft breweries provide an increasingly significant contribution to the Texas economy. Craft brewers account for only 0.7% of beer consumed in Texas, but still provided $608 million to the economy in 2010, according to the Guild’s 2012 Economic Impact of the Texas Craft Brewing Industry Fact Sheet. The craft brewing industry has also contributed to more than half of the job growth in the beer industry. This growing industry provides a sound economic benefit, especially in San Antonio, the home of multiple beloved craft breweries.
San Antonio has a well established beer brewing heritage that dates back to 1916 when the San Antonio Brewing Association, the Pearl Brewery’s predecessor, was the largest brewery in Texas. It is also true that San Antonians love products they can integrate into the culture and identify as their own.
“Craft beer is a natural segment of the market for people that want premium, flavorful options or want to support local business,” said McDavid. The increasing demand for craft beer is indisputable.
Texas craft brewers increased their 2011 volume by 46% compared to 2010 by producing about 133,000 barrels of beer, according to and economic impact study from the Texas Craft Brewers Guild. If legislation allows brewers to meet the increasing consumer demand, Texas craft breweries could realize their full potential.
The growth the craft beer industry has experienced is visible in San Antonio through our breweries, like Freetail and Ranger Creek.
“Every major metropolitan city has a developed local restaurant and bar culture, and San Antonio is charging forward in this direction,” McDavid said.
The Texas Craft Brewers Guild estimates the economic impact created by craft breweries could exceed $5.6 billion within the coming decade, amounting to an 821% increase by San Antonio’s target year 2020. Legislation offering comprehensive reform like the four Senate bills will empower craft breweries to make the economic potential into a reality.
Melanie Call is an independent grant writer working with local nonprofit agencies and Adjunct Professor of History at San Antonio College.