Proposed legislation seeks to benefit craft brewery industry across the state

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Craft breweries throughout Texas are restricted from selling their products for off-premises consumption as part of a law many in the industry describe as outdated and unfair, but a pair of bills introduced to the state Legislature this year could make substantial changes.

Senate Bill 312, filed by state Sen. Dawn Buckingham, R-Lakeway, and House Bill 672, filed by state Rep. Eddie Rodriguez, D-Austin, seek to allow craft breweries the same off-premises selling parameters as wineries and distilleries.

“The great thing about going to a winery is you get to bring home a few bottles of your favorite wine that you tasted,” Buckingham said. “Same if you go to a distillery. And we just feel like if you go to a brewery and you like what you tasted, you ought to be able to bring a little bit of it home with you.”

Craft breweries in Texas have grown from about 60 in 2011 to more than 250 today, according to the Brewers Association. The state produced nearly 1.2 million barrels of craft beer last year.

The most recent data from the Houston area shows the total number of craft breweries increased tenfold between 2008-17, from four to 40, according to a report from the real estate firm CBRE. Four craft breweries have opened in Cy-Fair since 2017.

A brewpub is limited to 10,000 barrels of production per year, but it can sell its beer and other brands at its establishment to-go, according to the Brewers Association. Breweries, on the other hand, can manufacture up to 225,000 barrels per year, and as long as they do not go over that cap, can sell up to 5,000 barrels for on-site consumption, but not to-go.

Charles Vallhonrat, executive director of the Texas Craft Brewers Guild, said the ability to sell beer to-go is economically beneficial for breweries, distributors and retailers.

Although similar bills filed in previous sessions have failed, he said he believes there is a better chance of the bills passing this session. If the bills do not pass, he said some breweries could make the switch to brewpub to take advantage of selling beer to-go.

“But if the bill passes, we might see some adjustments back the other way,” Vallhonrat said. “It’s a decision that each brewer has to make, but we want to make sure that it’s known that it is not just a simple choice to switch to being a brewpub.”

11 Below Brewing opened as a manufacturing brewery four years ago near Willowbrook Mall, and co-owner Bryce Baker said the business has since switched over to a brewpub license specifically to be able to sell beer to-go.

Baker said being able to sell beer to-go has helped pay the bills at 11 Below, so becoming a brewpub was the right decision for the time being.

With plans to produce about 4,500 barrels this year, 11 Below’s operations would not be immediately affected by the bills’ passage, but Baker said it could in a few years once production exceeds 10,000 barrels a year.

“If the law passes and everybody can sell beer to-go, it just levels the playing field,” he said. “It would give all the breweries a little extra cash in their pockets and give the consumer new things to try they couldn’t before. Beer to-go is kind of a no-brainer.”

Other craft breweries in the Cy-Fair area include Bearded Fox Brewing Co. on Spring Cypress Road, Klaus Brewing Co. on Jones Road, Twisted Acre Brewery on Grant Road and Wicked Boxer Brewing on Mueschke Road.

Distributors oppose legislation

Texas beer laws have long been written in favor of distributors, companies who continue to lobby against the craft beer industry to make more money, Baker said.

Brewpubs are limited to 1,000 barrels annually when it comes to self-distribution. Baker said distributors sell beer to bars for the same price the brewer would, so while it does not affect the end consumer, the distributors receive a portion of the profits.

“Distributors complain about us selling directly to a customer, but that might be the first time they try this product,” he said. “They might pick it up next time they’re at the grocery store, which benefits the distributors. It’s kind of a win-win … but the distributors don’t look at it that way.”

Rick Donley, president of the Beer Alliance of Texas, which represents distributors for brands such as Anheuser-Busch Co. LLC, said he believes the proposed bills are too open-ended, and he is against them as they are written.

Allowing sales for off-premises consumption in craft breweries not only disrupts the three-tier system of manufacturing, distribution and retail sales, but it could harm businesses such as bars, convenience stores and grocery stores, Donley said.

“If you’re a bar owner … or let’s say you’re a convenience store operator—either one—and all of sudden, a craft brewer comes and builds a facility across the street from you. All of a sudden he’s allowed to sell in all three tiers,” Donley said.

Whether SB 312 and HB 672 pass this session, state data suggests the craft brewery industry in Texas and in the Greater Houston area is not going anywhere.

The Brewers Association reported craft brewers contributed $76.2 billion and more than 500,000 jobs to the U.S. economy in 2017. Baker said beer laws in Texas need to be updated in general, and lawmakers should adopt best practices from other states.

“Most of these laws were written in Prohibition timeframe, and they haven’t been modernized since,” he said. “We’re 80 or 90 years behind the time, and the world has changed.”

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Danica Smithwick
Danica joined Community Impact Newspaper in May 2016 after graduating with a journalism degree from Union University in Jackson, Tennessee. She covers public education, local government, business, demographic trends, real estate development, nonprofits and more in the Cy-Fair community.
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