Small Brewers Ask Lawmakers to Open the Tap

Craft beer brewers came back to the Capitol today to ask lawmakers to grant them another way to get their beers in the hands of customers.

House and Senate committees today heard a pair of bills — HB 2436 and SB 1575 — that would allow small brewers and manufacturers that produce 75,000 barrels or less a year to sell up to 5,000 barrels of beer directly to their customers at the brewery.

This is something that is necessary if Texas craft beers are going to stay competitive, said Live Oak Brewery founder Chip McElroy.

“It allows us the marketing opportunity to try out new products and to connect with our customer,” McElroy said. Many other states already allow small breweries to do something similar to what these bills allow, McElroy said, and those states are reaping the benefits in the form of increased tourism, more business for the breweries and greater tax returns.

Sen. Kirk Watson, D-Austin, and author of the Senate bill, said that while craft brewers account for more than 4 percent of the beer sold in the United States, craft beer represents just 0.4 percent of the market in Texas.

“It’s not from lack of quality or consumer acceptance or enthusiasm about it. Rather it is because Texas small brewers are denied the same opportunities offered to small breweries in other states,” Watson said.

Watson and other proponents of the bills pointed to the tremendous growth of the wine industry since 2003, when wineries were first allowed to sell wine on the premises, as an example of what could be in store for craft beer. Watson suggested with similar liberties, craft brewers could bring in as much as $56.8 million in annual tax revenue and almost 7,000 new jobs.

But a lobbyist for the Wholesale Beer Distributors, one of two organizations representing beer distributors, opposed the bills, saying they would break down the three-tiered system that regulates the production, distribution and retail sales of beer separately. Randall Yarbrough, representing the Beer Distributors, told the Senate committee that HB 602, which they support and which has made it out of its House committee, would accomplish what craft brewers want without breaking down the system by allowing breweries to offer bottled beer to customers as part of a tour. (Another bill which the lobby opposed, HB 660, which would allow brewpubs to sell to distributors, has stalled in committee.)  

Watson pointed out that HB 602 would only help those breweries that bottle their beer — which many of the smaller breweries like Live Oak Brewery do not. Watson said his bill would not tie the sale of beer to a brewery tour.

Rep. Mike Hamilton, R-Mauriceville, chairman of the House committee in which the various beer bills have come up, said that while bills like the brewpub bill and the beer sales at breweries bill are still being reviewed by the committee, they might have to wait until next session for a real chance at passage.

“We don’t want to try and rush into a decision just to do it,” Hamilton said.