Change is Brewing

St. Arnold Goes to Austin

As we plunge headlong into the new year, what free time I have is spent pondering what the past year has brought us, what the future holds, the true meaning of existence, and… beer. But not just any beer - craft beers, loving produced by microbreweries.

These thoughts were prompted by a call to action from the Friends of Texas Microbreweries, who are attempting to convince the Texas Legislature that archaic alcohol laws are hurting this particular niche of Texas’ small business community.

Under current law, brewers cannot sell directly to the public. This is fine for the big guys like Bud and Coors whose product is available just about everywhere on the planet, and who have organized their corporate structure to include in-house distribution companies. But it hurts the little guys, who are typically small startups who won’t get premium service from wholesalers and distributors.

The laws that were originally designed to protect the consumer and small businesses from post-prohibition profiteers is now actually hampering small businesses and consumers, and favoring wholesalers, distributors, and megabrewers.

By law, bars and restaurants must buy their liquor from distributors, or wholesale retailers that double as distributors. By ensuring that a middleman is involved, prices are higher, and the distributor decides what he wants to distribute.

In addition, megabrewers have organizational structures that take advantage of this law. For example, Silver Eagle distributes almost exclusively Anheiser-Bush products. If you saw one their trucks on the road, you would assume it was a Budweiser truck, unless you read the logo on the door of the cab. Microbrewers don’t have the capital to skirt the law like this, whereas with the big guns, it’s just another corporate restructuring for the tax lawyers to orchestrate. It should also be noted that the beverage distribution industry has a strong lobbying presence in the state capitol.

So the Friends of Texas Microbrewers, led by my neighborhood microbrewery, St. Arnold, are pounding the Austin pavement and cold-calling our elected leaders to persuade them to change the rules, some of which have been in place since before prohibition in the 30’s, so that the small business portion of this industry is allowed to prosper on their own merits, rather than at the pleasure of the distributors.

This campaign is being joined from all over the political spectrum, from Off the Kuff on the left, to Perry vs. the World on the right, and many points between, which demonstrates that beer truly is the universal language.

On any Saturday, you can visit the St. Arnold Brewery, tour the beer works, and sample its wares. Unfortunately, once you’ve determined which of their twelve specialty beers is your current favorite, you have to go elsewhere to buy it. This is not the case in other states, such as California and Arizona, where microbrewers typically run an associated tavern for socializing and imbibing. Likewise wineries, even in Texas, where once you’ve sampled the wares, you can purchase a bottle to bring home with you.

Out of 19 microbreweries that have emerged in Texas, only five remain. Those that are still around attribute the loss of so many of their peers to the legislative culture they’re forced to work in.

We can no longer ignore the fact that 14 out of 19 microbreweries have failed in Texas in part because current regulations disadvantage microbrewing small businesses," said Saint Arnold founder Brock Wagner. "This common-sense proposal will allow Texas microbrewers to compete with out-of-state microbrewers on a level playing field."

While I’m on a soapbox (or should I say beer keg) about this, there are other portions of the Texas Alcoholic Beverage Code that could use some tweaking as well. For example, the code only allows beer to be sold in specific sized containers.

A Sunset Commission report cited the impacts of the Texas law that requires that beer be sold in only certain-sized containers. A 12-ounce can is fine; a 345-milliliter can -- common in much of the world -- holds 11.67 ounces, so it is banned by the TABC.

"As a result, [Texas] consumers lack access to a range of products bottled in metric sizes from countries such as Canada, Holland, Belgium, New Zealand and Japan, which can be purchased in almost all other states," the Sunset Commission report said.

So one domestic brewer has to pay $600,000 more to produce a container that conforms to Texas law. And a malt beverage producer estimated additional costs of $200,000 for that, the Sunset report stated.

Why the need for such a law? Because distributors prefer working with standardized containers. Sunset staffers wryly noted that "This does not seem to be a matter of state concern."

It’s time to change these decades-old laws to promote the small business atmosphere that our elected leaders are constantly spouting about. Give our microbrewers a fighting chance, and they will flourish. Or, as I like to say, "if you brew it, they will come".