Craft Brewers Seek Further Reforms From Lawmakers

The 2013 legislative session, which featured the largest overhaul of the beer industry since 1993, was viewed by many observers as a watershed moment for craft brewers in Texas. But in testimony before the House Economic and Small Business Development Committee on Thursday, Scott Metzger, who sits on the board of the Texas Craft Brewers Guild, said the state can still do more for the industry.

At a hearing on how to make Texas more attractive to venture capital investment, Metzger predicted that over next 10 years, the brewing industry could be the most dynamic growth sector of the Texas economy. That potential is limited, he said, because of remaining restrictions on brewers that make it difficult to attract investors.

"The restrictions the state of Texas places on our businesses dictate that it often makes better economic sense to deploy capital in a different state," Metzger, a former economics professor, told lawmakers.

The trade association that represents Texas beer distributors, the Wholesale Beer Distributors of Texas, has previously pushed back against changes to the industry that it believes threaten the state's three-tier system, which divides producers, distributors and sellers so that the state can effectively oversee the alcohol industry.  

But state Rep. Eddie Rodriguez, D-Austin, who was at Thursday's hearing, said he believed the three-tier system could survive some modernization.

 

"We need to put our money where our mouth is in terms of [whether] we want small businesses and local businesses to succeed," he said. "If we do, and that means tinkering with the three-tiered system and making it so it works for them, then lets do that."

Asserting that New York, Washington, Colorado and even California had more brewer-friendly environments than Texas, Metzger said Thursday that the industry is encumbered locally by "restrictive franchise statutes" and "a regulatory scheme that restricts our ability to sell and market our products and, in one particularly egregious instance, to realize any of the actual value of the brands that we have created."

In addition to approving a slate of bills in 2013 that opened up the industry in ways his group appreciated, including allowing brewpubs to distribute their beer off-site via third-party distributors, Metzger said lawmakers also passed a bill that they were less enthusiastic about that prevented brewers from receiving compensation from wholesalers for their distribution rights. He also raised objections to rules that he said essentially lock in distribution agreements "for life."

Metzger encouraged lawmakers to think of the three-tiered system as "a living, breathing thing that needs to evolve with the changing marketplace."

Later, when asked if he worried that it would be difficult to push lawmakers for further changes in 2015 after a series of legislative successes in the last session, Metzger told The Texas Tribune: "As citizens, we reserve the right to ask. If they get tired of dealing with the same stuff over and over, get it right the first time."