Lawmakers tap brew laws
Bill package widens craft beer distribution
Published: Tuesday, April 23, 2013
Updated: Tuesday, April 23, 2013 01:04
Water, yeast, malt and hops — the four main ingredients to a craft brew. Now add a long-awaited package of legislation to the mix, and the beer can reach more than just those who make it.
The Texas Senate passed a package of bills in March that — if also passed by the House and signed by Gov. Rick Perry — could change the future for craft breweries, brewpubs, microbreweries and craft beer enthusiasts.
Senate Bills 515, 516, 517 and 518 form the beer legislation authored by Sen. Kevin Eltife, R-Tyler. The package of bills is grouped to address the production amounts and distribution of craft beers in Texas.
“We broke up the legislation to keep it in four separate bills,” Eltife said. “One deals with distribution, one deals with breweries, one deals with brewpubs and one deals with self distribution. It’s just our way of separating the issues into different pieces of legislation.”
Even though the legislation package is being presented as four separate bills, all must be passed in order for changes to be made in the craft beer industry.
“They’re all tied together,” Eltife said. “They live or die together. All these bills are contingent on another one passing. We hope the House passes them as a package.”
S.B. 515 increases the production limit for a brewpub from 5,000 to 10,000 barrels (bbls) annually and authorizes a brewpub to sell its products to the wholesale tier for resale.
“With this new legislation, brewpub owners would be able to work with a distributor and sell their beers through that distributor,” said Charles Vallhonrat, executive director of the Texas Craft Brewers Guild and Class of 1987. “That distributor can then take that beer into the retail channel so a consumer could finally be able to get that beer at a restaurant — other than a brewpub — or a liquor store like Spec’s.”
S.B. 516 and S.B. 517 authorize a production brewery under 125,000 bbls of annual production to self-distribute up to 40,000 bbls annually of beer, ale and malt liquor to retailers.
S.B. 518 authorizes a production brewery under 225,000 bbls of annual production to sell up to 5,000 bbls annually of beer produced by the brewery to ultimate consumers for consumption on the premise of the brewery.
As a result of the bills, the way consumers can purchase beer from the breweries would change. Rather than going to a brewery, paying for a tour and getting a free beer or two, consumers will be able to go to the brewery and just pay for a beer, Vallhonrat said.
“There are breweries that actually have tourism involved,” Eltife said. “If you go out to the brewery, they can’t sell you the beer on premise — this [bill] will allow them to sell you the beer on premise. The whole package promotes the craft beer industry. It will help them grow, create jobs and bring tourism to Texas.”
Eltife said some estimate the beer legislation could create 50,000 jobs in the next 10 years.
“The craft beer industry creates a lot of revenue for the state,” said John Januskey, founder of New Republic Brewery in College Station and Class of 2002. “For every barrel of beer we produce, the state gets $7 as soon as it goes into a package.”
With S.B. 518, craft breweries will have the opportunity to increase their revenue from onsite beer consumption in tap houses, Januskey said.
Craft brewers such as Januskey and Dave Fougeron, owner of Southern Star Brewing Company and Class of 1995, said the new legislation would make it easier for Texas craft breweries to compete with out-of-state breweries that distribute in Texas.
“They give an unfair advantage to out-of-state breweries versus breweries that are in the state,” Fougeron said. “For instance, a brewery in Oregon that can sell here can have a brewery, a tasting room, a restaurant. They can self-distribute their beer, they can pretty much do what they want to. They’ve got the additional revenue to out-compete us, because we’ve got one hand tied behind our backs.”
The current beer legislation that Texas craft breweries operate under was passed close to 80 years ago.
“The aim of this [package of] legislation is to make it a little more fair for breweries in Texas and get the code up to date with the modern craft beer industry,” Januskey said. “All the rules that we’re under primarily are still left behind from prohibition or from just after prohibition.”
According to Craft Brewing Business, Texas — with 25 breweries opening — was the third-fastest growing state in 2012 for breweries after California’s 56 and Colorado’s 29.
The package of beer legislation would allow new breweries to continue to open; it would also help them reap profits from the beginning.
“These bills are really huge for small craft breweries when you’re first starting out,” Januskey said. “These bills will allow small craft breweries to start up and have a good revenue stream right away and also provide jobs.”
The bills could also provide a sense of comfort and familiarity for the beer consumers.
“They’re good bills for the craft brew industry and they’re also good for the consumers of beer,” Januskey said. “[The legislation] creates a greater selection for fans of craft beer and being able to come to the brewery and have a beer, look around, meet the owners, meet the brewers, get to know everyone involved, makes it your local beer.”