Hopsquad Brewing Co. is on track to become the newest player in Austin’s most established craft brewing alley, a half-square mile of land just north of Research Boulevard that currently boasts six breweries and one cider house.
But despite the nearby competition, head brewer Alex Limon never intended to package Hopsquad’s beer to sell in grocery stores. He wanted to sell it out of the taproom.
“I wanted to base my business model on having in-house sales. It was going to be that or nothing,” Limon told Community Impact Newspaper.
The brewery will operate under a brewpub license, which, until recently, was the only way for an operation such as Hopsquad to sell customers its beer packaged at the taproom for off-site consumption.
Now, a change in regulations from a bill passed during the 86th Texas Legislature will allow all breweries, regardless of license type, to sell beer to go at their breweries. Texas was the last state to legalize the practice.
The change, which will take effect Sept. 1, will have a drastic effect on breweries, local brewers contend.
“It just opens up whole other possibilities in terms of revenue streams,” said Ben Sabel, president and co-founder of Circle Brewing Co. on Braker Lane.
Circle transitioned to a brewpub license last year to sell beer to go on-premise. When the brewery initially opened in 2010, Circle was licensed as a manufacturer.
A manufacturer’s license allows breweries to produce up to 125,000 barrels annually—115,000 more than a brewpub can produce. Under Texas’ previous regulations, however, manufacturer breweries were unable to sell their product to go.
The new law—a last-hour addition to a bill that allows the Texas Alcoholic Beverage Commission to continue operating—permits brewers of all licenses to sell up to 288 ounces of beer for off-premises consumption per daily customer.
This gives flexibility to operations for breweries across the state. For example, breweries in North Austin can soon regularly hold special releases, such as collaboration brews or barrel-aged variants, that sell exclusively out of their taprooms.
“This law gives [breweries]currently in that [manufacturer]model an opportunity for growth, who can take advantage of … the brand building and the margin building in those releases,” said Charles Vallhonrat, executive director of the Texas Craft Brewers Guild.
The change may have come at the perfect moment for breweries, as well. Data from Nielsen, a data analytics company, shows retail craft beer sales were down 0.2% in 2018, a sharp decline from the 12.9% growth the industry enjoyed in 2015. However, craft beer sales were still up nationwide 3.9% in 2018, according to the Brewers Association, a nationwide craft beer trade organization. These figures suggest craft beer customers increasingly prefer to buy the product from the source.
Vallhonrat said he believes this legislative change has the potential to make entry into the market easier for prospective brewers because of this new revenue stream.
The Texas brewery scene has plenty of room to grow. In 2015, Texas ranked 44th in the U.S. for breweries per 100,000 adults age 21 years or older. In 2018, the state fell to 46th in the nation, according to the Brewers Association. Vermont is first in the U.S.
This all comes as craft beer tourism is starting to take off, Vallhonrat said. Relaxation of the beer-to-go laws, combined with a potentially increasing number of breweries, could result in an injection of tourism dollars throughout the state.
“I think that is … something the state of Texas has been behind the times on. Now that the law has changed it is going to reinforce the positive aspect of breweries in the tourism industry,” Sabel said.