As many as four craft breweries and brewpubs have opened in the area since 2015, and another is on the way, mirroring growth seen statewide and across the Greater Houston area.
Excalibur Brewing, the newest local craft beer spot, expects to open this December with a taproom and beer garden as the first brewpub to produce beer on-site in Old Town Spring. Co-owner Jeremy Hahn said the community has already shown an interest in craft beer.
“Every time we’re there working on the brewery, somebody from the area stops by and asks when we’re going to be open, so there’s definitely that attraction to craft beer,” he said.
Changes in state legislation have been made to accommodate the growing craft beer industry. The latest state law, which went into effect Sept. 1, allows craft brewers to sell beer to go for off-premise consumption.
Despite this change, some craft brewers say they still face challenges in navigating the state’s complex alcohol laws.
Alex Porter, co-owner of Southern Yankee Beer Co., which opened in Spring in October 2018, said he believes the state’s alcohol laws still have unnecessary regulations for craft brewers. His sister and Southern Yankee co-owner, Sydney Porter, said Texas legislation is only starting to catch up.
“Craft beer is moving ... much faster than the change in any kind of regulation, and so that is outpacing itself before the laws are able to adjust to the new way of doing things,” she said.
INDUSTRY GROWTH
Bart Watson, chief economist for the Brewers Association, an organization that represents craft brewers, said consumer demand drove the sharp rise in the number of craft brewers across the country in the last decade.
“We’ve seen beer lovers want flavored beers, ... more variety on tap and on shelves,” Watson said. “Increasingly, ... we’ve seen people wanting to support small and independent local producers.”
In the Greater Houston area, the number of craft breweries and brewpubs grew from four in 2009 to 64 as of August, according to research by commercial real estate firm NAI Partners. Likewise, Greater Houston-area barrel production increased from 23,484 barrels in 2008 to 110,282 in 2016, according to CBRE Research, a commercial real estate firm.
Despite this rise in production, Texas has lagged behind in the craft beer market as compared to other states, Watson said. In 2018, Brewers Association data showed Texas had 1.4 breweries per 100,000 adults over 21, ranking 46th in the U.S.
“The environment in Texas for [craft] breweries has been harder,” he said. “They’ve had less access to markets than a lot of other states.”
The Spring and Klein area has nonetheless seen local growth in craft beer. In addition to Excalibur’s upcoming opening, Fortress Beerworks opened on Spring Cypress Road in March.
Co-owner John O’Hara said craft beer legislation has benefited the industry as a whole.
“With some of those craft brewery-friendly changes [in legislation], you’re seeing the overall market start to increase,” he said.
BEER TO GO LAWS
Craft breweries annually producing less than 225,000 barrels began selling beer to go for off-premise consumption Sept. 1. Brewers said being able to sell one case of beer to go per customer per day grants them more direct access to consumers.
Authored by state Rep. Chris Paddie, R-Marshall, beer to go was part of House Bill 1545, which was signed into law by Gov. Greg Abbott on June 15. State Rep. Sam Harless, R-Spring, who voted in favor of the bill, said encouraging business is part of Texas culture.
“[Beer to go] gives [craft breweries] another revenue source, so they don’t have to sell to a wholesaler,” Harless said. “Brewers can sell to people that walk into their business; they can promote their stuff and hopefully grow.”
While the bill directly affected brewers annually producing around the 225,000 barrel limit, smaller craft brewers, such as brewpubs that could already sell beer to go, were largely unaffected. Despite this, Bryce Baker, co-owner of 11 Below Brewing Co., said beer to go was an important gain for the craft beer industry overall.
Baker said when navigating the legal process of starting the brewery, which opened on Bourgeois Road in 2015, he and fellow owners Jeff Handojo and Brandon Moss chose being able to self-distribute over selling beer to go.
Under a brewpub license, 11 Below could have sold beer to go but would have been limited to self-distributing only 1,000 barrels per year.
“We knew we were going to self-distribute more than 1,000 barrels, so we had to be a brewery,” Baker said. “[The] only downside with being a brewery—at that time—was you [couldn’t] sell beer to go.”
11 Below later transitioned to a brewpub license to enable them to sell beer to go. Because brewpubs are classified within the retail tier, they are able to sell beer to go as long as their annual production is less than 10,000 barrels.
However, those who opposed beer to go said it allows breweries to bypass distributors—violating the state’s three-tier system. The system, which includes manufacturers, distributors and retailers, was implemented to maintain a fair marketplace for alcohol sales, according to the Beer Alliance of Texas, which represents distributors.
Beer Alliance President Rick Donley, who was against beer to go when the bill was first proposed earlier this year, said the previous system protected one tier from having a monopoly over alcohol sales.
“If you’re a bar owner and have been in the ... area for a number of years, or let’s say you’re a convenience store operator—either one—and all of a 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,” he said.
Charles Vallhonrat, executive director of Texas Brewers Guild, an organization that advocates for Texas craft brewers, said he believes the three-tier system should maintain a balance that fairly represents craft breweries, which make up less than 10% of the state’s total beer market share.
“A ... government-regulated system should not pick winners or losers,” Vallhonrat said. “It should allow some natural competition.”
LOCAL OPPORTUNITY
Vallhonrat highlighted an additional legislative change passed in the 2019 session that affects all craft brewers. Effective Dec. 31, the state will adopt a federal product label approval process that Vallhonrat said will be more efficient, which is vital for craft beer due to its shorter shelf life.
“If you’re introducing a seasonal beer ... that requires very fresh hops, in six weeks, you’ve killed your product,” he said. “Now, you can get label approval in a week or so, and [get] to market a lot faster.”
Watson said the state’s fledgling craft beer market provides more opportunity for growth as compared to other parts of the country. Moreover, he said room for growth will come from local areas, such as Spring and Klein, as markets near urban areas become more mature.
“What drives the people in craft beer is passion for the product and passion for the community they’re in,” Watson said.
Brian Rash contributed to this report.
