Brewpubs and craft beer have increased in popularity in the Katy area for the last several years, according to local Katy-area pub owners. However, changes in regulations may limit the growth of microbreweries through action that was passed last session in the Texas Legislature.
Growler U.S.A. co-owner Lance Mayo said the growing interest in craft beers and brewing was part of why he opened the national pub franchise’s Katy location in August 2016. Mayo had been working as a mortgage broker when he and his wife decided to open a business. Mayo had done research and learned Growler U.S.A. was starting to sell franchises; he also knew the brewpub and craft beer trend was going to grow.
“I bought into the theory of it, which I still really love the theory of it,” Mayo said.
Charles Vallhonrat, executive director of the Texas Craft Brewers Guild, said while Texas is known for regressive alcohol laws, progress was made by the state Legislature in 2013, which led to industry growth.
“It lowered the barrier of entry from the brewer’s perspective and made an easier path to profitability through the changes to the permits and licenses,” Vallhonrat said.
These changes allowed brewpubs to sell beer to-go, doubled the amount of beer brewpubs could produce annually to 10,000 barrels and allowed brewpubs to sell their products to other retailers.
Those changes have helped businesses like No Label Brewing Co. on First Street in Katy grow, Operations Manager Logan Respess said.
No Label Brewing opened in 2009 and by 2012, it had moved into its current location under the iconic silos at the end of First Street, Respess said.
Both Mayo and Respess said having a brewpub that sells craft beers without selling liquor provides a family-friendly atmosphere and helps the businesses contribute positively to the community.
“The beauty of a brewpub is you’re allowed to do lots of things with a lot more flexibility,” Respess said. “[We] get to bring in food trucks and bands and all those types of things that just kind of makes it a destination.”
Wild West Brewfest organizer David Loesch said the timing of the craft beer trend aligned well with the Katy Rotary Club starting the festival as a fundraiser in 2012. Since the first event, which saw just under 1,800 visitors, the festival has grown to more than 8,600 visitors in 2016.
Pending legislative challenges
The 2013 statutory changes related to brewpubs have been a boon to the industry, business owners said. However, during the last legislative session, House Bill 3287 was passed, which Vallhonrat said could hurt a craft brewery’s ability to expand.
Under the new law, breweries producing more than 225,000 barrels annually across all of their sites and investment partners have to pay distributors a fee to deliver products from production locations to their own taprooms, Vallhonrat said.
“So, effectively, that law provides revenue for somebody who does no actual work on the sale of the product,” he said.
Respess said the law will not affect No Label Brewing anytime soon because it does not yet produce the volume that would require it to begin paying distributors.
“We’ve heard from [other Texas microbreweries]that it will impact them,” Respess said.
Vallhonrat said it was the strength of the distributor lobby that pushed the bill through, but state Rep. Gary Elkins, R-Houston, who coauthored the bill, said the bill prevents large megabreweries from operating taprooms and becoming beer distributors.
“The independence of market participants in the beer industry is imperative to preventing monopolies and vertical integration,” Elkins said.
Vallhonrat said the TCBG will continue supporting pro-craft beer legislation and candidates via the CraftPAC, a political action committee formed following the 2017 legislation.
“We continue to focus on our No. 1 priority, which is to lose no rights and keep at least the status quo—if not make things better,” he said.