Texas craft brewers lose fight over taproom bill
The sheer hypocrisy is baffling. On 22 May 2017, the Texas Senate passed a law which seeks to limit breweries that grow beyond a certain size or become owned by a larger beer company, from self-distributing. But who is to benefit? Only the distributors, not the craft brewers.
The craft brewers’ guild said as much in a statement published on Facebook shortly after the bill was passed: “This bill will put a ceiling on success for the 200+ craft breweries operating in Texas and will slow the future growth of what has become an important burgeoning manufacturing industry in our state.”
The bill will now head to the governor’s desk to be signed into law.
Pushed by distributors through their trade groups, the bill will change the Texas beer code in the following ways.
Breweries making 225,000 barrels (260,000 hl) of beer per year (a calculation that includes the volume from any affiliate brewery with a 25 percent or more stake in the company) cannot operate a taproom, unless they pay their distributor for all beers they sell in their taprooms.
You may think that 260,000 hl beer is a high ceiling for craft brewers. But observers say Austin’s Oskar Blues Brewery is affected, and any future taproom locations of breweries like Houston’s Karbach Brewing - now owned by Anheuser-Busch - will also have to pay up. They can have up to three tasting rooms.
Moreover, self-distributing breweries can only self-distribute a total of 40,000 barrels across all locations; anything above that has to be sold through a distributor. This means that single-premises breweries like Austin Beerworks and Live Oak Brewing can only expand so much if they want to keep their independence from the wholesale tier.
While the distributors argue that the bill prevents the Big Brewers from “gobbling up” Texas’ small craft brewers and having “access to multiple taprooms across the state,” many think this bill is just extortion by another name.
Consider this: why should brewers have to buy back their own beer from a distributor in order to sell in their taprooms? As we see it, distributors will make money from successful craft brewers without having so much to do as to load the beer on a truck, drive it off the compound and return it after a u-turn so that it can be sold on-site. “They just kind of bump up against your dock and pick up a check,” John Reardon of Deep Ellum Brewing in Dallas was quoted as saying. He added that his big plans for expansion are now down the drain.
Given that Texas brewers had hoped 2017 would be the year Texas allows its breweries to sell beer directly to customers for off-premise consumption, the bill has been a big blow.
