Want More Beer? Change This Law!
There's a Texas law that prohibits breweries from selling their beer in their gift shops. Bill Metzger, the publisher of Southwest Brewing News, says it's the worst of many bad beer laws in Texas.
"It doesn't make any sense," he says. "It's like you make a killer brisket at your barbecue joint, and when people come to visit, you have to tell them you can't sell them any. I can't tell you how many small breweries in New York and California have told me that without their gift shop they would go out of business."
Once you subtract retail markup and the distributor's cut, a small brewery sees very little of the price you pay for a six-pack in a supermarket. Fledgling craft breweries don't make enough beer to interest distributors or retailers either, says Tony Formby, managing partner of Rahr & Sons brewery in Fort Worth. Selling beer for full retail from a gift shop can help a tiny brewery survive.
But it's not just the profits that make on-site sales so important; it's the marketing. When you go to a brewery, you want to buy the beer you just tasted and then show it off to your friends, Metzger says. "That creates a buzz that gives the little guys a chance to grow."
"Texas wineries got together and got a law passed that allows them to sell bottles at the winery—people don't understand why we can't do the same thing. The difference is that there are 160 wineries in Texas and they have the Department of Agriculture behind them," Formby says. The wineries are getting support from the wine distributors, help from the tourism department and encouragement from their local communities. "There are only five or six of us, and we don't get any support at all."
Rahr & Sons produces around 5,000 barrels of beer a year. Saint Arnold brews around 18,000 barrels. Shiner produces 550,000 barrels a year. Compare these amounts to the Anheuser-Busch brewery in Houston, one of 12 around the country, which has a capacity of 12 million barrels a year.
In 2007, Brock Wagner, the founder of Saint Arnold Brewing Co., led a coalition called Friends of Texas Microbreweries in an attempt to convince the Texas Legislature's House Licensing and Administrative Procedures Committee to change the law to allow sales at microbreweries.
"Every place where microbreweries have flourished, the laws have been changed to give them the ability to sell to the public," Wagner points out. Every member of the Legislature he talked to in Austin was supportive, but the bill never reached the committee.
Mike McKinney, the beer lobbyist who represents Wholesale Beer Distributors of Texas, the Budweiser and Miller distributors, had a lot to do with the death of this bill. The beer distributors are major campaign contributors to licensing committee chair Kino Flores, a Palmview Democrat, as well as just about every other politician in the state of Texas.
Wagner vows to try again in 2009.
"The wholesalers are forcing people in Texas to buy beer from breweries in other states because they will not allow the laws to change," Metzger warns. "The Texas beer wholesalers do a great job of protecting their own interests, but they have been a terrible force in preventing small craft breweries from growing."
"If the Texas beer wholesalers had their way," one craft brewer quips, "we'd all drink Bud and Miller in cans, and we'd have to buy them a case at a time."
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