Growth on tap for local craft brew industry

Beer bars, brewpubs open in Central Austin

With a new craft brewery planned for West Oltorf Street, new and existing craft breweries expanding and multiple craft beer bars opening in Central Austin, industry aficionados say Central Austin and the surrounding area are in the midst of a craft beer renaissance worthy of a toast.

Meanwhile, brewers and economists say further growth is expected if the Texas Legislature passes a set of bills that would loosen restrictions on craft breweries and brewpubs. The bills passed the Senate in March and are awaiting House approval.

"The growth of the craft beer industry, even under the current law, has given people an awareness about craft beer that they didn't have two years ago," said Davis Tucker, North by Northwest Restaurant and Brewery founder. "I think this legislation would create an even bigger explosion."

The Texas craft beer industry contributed more than $608 million to the state's economy in 2011, according to a study commissioned by the Texas Craft Brewers Guild. A craft brewery is defined by the American Brewers Association as a small, independent brewer that produces less than 6 million barrels of beer per year. A brewpub is a restaurant that also brews its own beer.

Industry growth

In March, Pinthouse Pizza doubled the size of its brewing system, Hops & Grain started canning its third type of beer and Infamous Brewing Co., which was founded by an investment banker and graphic designer, celebrated its launch party. In 2012, Austin Beerworks expanded its brewery system; Austin Beer Garden Brewing Co.—which was founded by former Uncle Billy's brewers Amos Lowe and Brian Peters—announced its plans to open in June; and the Whip In began brewing its own beer.

Growth is the norm in the local craft beer industry. In Texas, 92 percent of Texas craft brewers are planning capital expansions, representing upwards of $30 million invested within the next five years, according to a 2012 TCBG study authored by Scott Metzger, an economist and founder of Freetail Brewing Co. in San Antonio.

Pinthouse Pizza Head Brewer Joe Mohrfeld said the expansions in Austin are just to keep up with demand.

"I don't feel like there is a mad dash by anybody to be the biggest brewery in Austin," he said.

Meanwhile, multiple Central Austin bars such as Craft Pride, Banger's Sausage House & Beer Garden, and The Chicago House have recently opened and are dedicated to serving craft beer. Craft Pride co-owner J.T. Egli said having 54 taps serving craft beer from 23 different Texas breweries, as his Rainey Street bar does, would have been unheard of just a few years ago.

"Texas and Austin are pushing the envelope now," he said. "I can only see [the local craft beer industry] getting bigger."

Mohrfeld, who previously worked as the head brewer for Odell Brewing Co. in Colorado, a state considered to be at the forefront of the craft beer movement, said there is an enthusiasm for craft beer in Austin that is unlike any other scene he has seen.

"Whereas in Colorado or Portland or California, where [the craft beer industry] is really well-established, I never felt like there was the same energy that is going on here right now," he said. "People really want to be a part of it, whether it is as a consumer, a brewer or a fan. That excitement is huge."

Room for growth

Texas craft breweries produced 4.6 million gallons of beer in 2012, which was more than a 228 percent increase from the 1.4 million gallons of beer Texas craft breweries produced in 2008, according to the Texas Alcoholic Beverage Commission.

Despite the growth, Texas ranks in the bottom 10 states for breweries per capata, with only 0.7 percent of the beer that is consumed by Texans per year coming from independent Texas craft brewers, according to the TCBG study. For comparison, nearly 16 percent of beer consumed in Oregon annually is produced by independent Oregon craft brewers, the TCBG study says.

However, Metzger and Mohrfeld say they see that trend changing. Texas tied for second place with California in the number of new breweries that opened in 2012, according to Mohrfeld.

The TCBG study projects that the economic impact of Texas craft breweries could reach $5.6 billion annually in less than a decade if the package of beer bills pass and follow a similar trajectory to Texas' wine industry. When legislation passed allowing Texas wineries to sell their product on-site directly to consumers, the number of Texas wineries increased from 29 to 200 within two years, Tucker said.

"[The $5.6 billion projection] sounds astounding, but given what's happening across the country with craft beer, it's not," the TCBG study says. "It's actually conservative."

Legislative action

Tucker said he teared up when he heard that the package of beer bills passed the senate. He said has been working to help loosen the regulations of Texas craft beer laws since 1987.

"It was just a release of pure joy," he said. "This has been going on so long, and now we are at the precipice."

To the consumer, the passage of the bills would mean one could buy beer from a brewpub such as North by Northwest at a store such as H-E-B. The current law only allows brewpubs to sell their beer on-site.

"From an individual standpoint, if you are a craft beer drinker, it is providing more choice and opportunity to try more and different beers," Tucker said.

The bills would also allow customers to buy beer from Texas craft brewers and drink it at the brewery. Tucker said that allowing craft brewers to directly charge for selling their beer on-site would be a boon to the breweries.

"It increases the survivability of these small breweries," he said. "It generates greater cash flow, and greater cash flow generates more opportunity for success."