Beer freedom for Texas
The complexities of the Three-Tier System in the U.S. never fail to amaze us at BRAUWELT International. Here is another maddening anti-competitive regulation: Under Texas law, brewpubs may serve beer or sell it directly to the public for home consumption, but they are not allowed to sell it via distributors or retailers. On the other hand, a brewpub in California isn’t subject to Texas restrictions, so it can sell beer on site as well as package it for distribution to other states, including Texas. A Texas brewpub can’t do this. So in Texas you have a situation where you can buy beer from a Californian brewpub at your local shop, but you can’t buy beer from the brewpub down the street. The only place to get a Texas brewpub beer is from the source.
It gets even odder: Small breweries in Texas are prohibited from providing a limited amount of beer to consumers for off-premise consumption at the end of a brewery tour. Tourists can sample beers but cannot take any beer home with them.
Fortunately, a brewpub coalition has been set up, known as Texas Beer Freedom, which is fighting to have these restrictions lifted.
They argue that although Texas (25 million inhabitants) ranks 10th in per-capita beer consumption, according to the Beer Institute, the state ranks 47th in breweries per capita.
There are only 29 brewpubs in the whole of Texas. It’s a tiny industry. In 2009, Texas brewpubs produced 12,755 barrels of beer (14, 859 hl) and grossed USD 31.9 million in sales, according to a report commissioned by Texas Beer Freedom.
At a legislative hearing in Austin, Texas, on 22 March 2011, more than 60 witnesses, including beer distributors with the Beer Alliance of Texas and the Licensed Beverage Distributors, signed up to support House Bill 660. The proposal would allow brewpubs to sell their beer through wholesalers to grocery stores or other retail outlets. The original bill would have allowed brewpubs to distribute directly to other bars, restaurants and stores. But after a compromise with the Beer Alliance of Texas, the bill would only allow brewpubs to sell their bottled wares via a beer distributor.
There is another House Bill, HB 602, which would allow breweries to charge admission for tours and include up to two six-packs of beers to give to tourists at the end of the tour.
But as The Texas Tribune notes, before these bills can become law, "the small brewers have to overcome some opponents with big names and deep pockets: the powerful beer distribution lobby." This lobby resists any erosion of its privileges under the "three-tier" alcoholic beverage distribution system, the pure version of which decrees that producers, wholesalers, and retailers should never be the same businesses. Their argument is: why change a system when it has worked so well for so long? Well, as the Texas Beer Freedom guys would argue: it has worked very well for them. In fact, it has allowed them to maintain their monopolies.
The way the hearing on HB 660 and HB 602 went, local observers were delighted to report that there was progress achieved on them.
They think that the bills, if approved, will come into effect on 1 September 2011.
