This is a potentially monumental moment for the craft brewing scene in Texas. There is some serious pending legislation on the table that could redefine the industry, and Craft Brewing Business reached out to Charles Vallhonrat, executive director of the Texas Craft Brewers Guild (TCBG) after the group held its annual meeting in February.
According to Vallhonrat, craft brewing is thriving in Texas. Most existing breweries are growing and contemplating expansion plans and there are plenty of other breweries and brewpubs that are opening or are planning join the party. In fact, TCBG numbers estimate 92 percent of Texas craft brewers are planning capital expansions, representing upward of $30 million invested in the next five years.
The guild completed an economic study last year that reported brewery sales reaching hit $75.9 million with volume nearly doubling year over year. The direct economic impact surpassed $222 million and $16 million was contributed to local and state tax revenue.
The legislative battle
But what could really grow the craft beer industry in Texas is some recently tabled legislation, thanks in part to the TCBG.
“The Texas Craft Brewers Guild has been working with the Texas legislature and other stakeholders in the craft beer market to develop legislation that will modernize the state’s alcohol regulatory system to make Texas’s small craft brewers more competitive,” Vallhonrat said. “The package of bills (SB 515, 516, 517, and 518) introduce changes for both brewpubs and package breweries. The bills allow Texas breweries to be more competitive and will drive growth for these small businesses that bring jobs and tax revenue to that State of Texas.”
Here is how Vallhonrat summed up the bills:
- Increases the production limit for a brewpub from 5,000 to 10,000 barrels (bbls) annually
- Authorizes a brewpub to sell its products to the wholesale tier for re-sale
- 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
SB 516 & 517
- Authorizes 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. This right currently exists, but this bill will increase the size of the brewery while reducing the amount that may be self-distributed. Currently, a brewery under 75,000 bbls of annual production may self-distribute up to 75,000 bbls.
- Eliminates discrimination against out-of-state suppliers.
“The guild has been directly involved in the development of these bills, and two of our board members, Scott Metzger of Freetail Brewing in San Antonio, and Brock Wagner of Saint Arnold Brewing in Houston, recently testified before the Texas Senate Business and Commerce Committee about the impact of the legislation,” Vallhonrat said.
Along with the forwarding of these heavily favored craft beer bills was a fifth piece of legislation that the industry is not as excited about. The team at Jester King, for one, voiced their displeasure with this fifth bill (SB 639) that would make it illegal for breweries to sell the right to distribute their products to wholesalers while making it legal for wholesalers to sell those same rights to one another. Current laws also favor the distributor in the relationship, as they state a brewer cannot terminate or fail to renew a relationship without good cause or proper compensation, while a distributors are free to terminate whenever, according to the Jester King blog post. We quote the post:
The passage of this law will be a terrible injustice, which we believe will ultimately be overturned, but if opposing it is not a battle that we can win right now, we agree with Scott Metzger that it’s better to win the battles we can, gather momentum and live to fight another day. Scott, Brock Wagner, and the other representatives of the Texas Craft Brewers Guild, along with their allies, Open the Taps, and the Beer Alliance of Texas, were also able to mitigate the damage of SB639 somewhat by lobbying successfully for the inclusion of a section that would formally codify the legality of other means by which distributors are able to support brewers without running afoul of this or other sections of the code. We sincerely thank them for their efforts in this regard, and for all of their hard work throughout this process.
… In the end, though, if all five bills pass, we’ll have a lot more to celebrate than we will to lament.
What else is there to know about the Texas Craft Brewers Guild?
The guild’s annual meeting took place at Lakewood Brewing Co. in Garland, Texas, and included nearly 100 attendees – including brewers, allied trade members, and a great enthusiast turn out.
“A really big ‘thank you’ goes to Wim Bens and his team at Lakewood Brewing for taking such good care of us,” Vallhonrat said. “We had a really full agenda that included a panel of brewing experts discussing troubleshooting in the brewing process, talks from the Brewers Association and the Master Brewers Association of the Americas, and a number of topics covered by members of the TCBG board of directors.”
The next big event for the Texas Craft Brewers Guild is its annual Texas Craft Brewers Festival that will be held in Austin at the end of September. The Festival attracts about 5,000 Texas craft beer fans for a day of great Texas craft beer, food and music. Last year’s event had 28 Texas craft breweries on hand, and the guild expects to increase that number this year by 10 or more breweries.
Beyond the meetings and the legislative actions, the TCBG has a ton of educational and social focuses.
“The craft brewing community is a remarkably open community with breweries and brewers supporting each other with advice, feedback and references to suppliers, education and other resources,” Vallhonrat said. “We regularly bring brewers together in meetings throughout the state so they can get to know and learn from each other. We also bring Allied Trade members together with our brewers. Allied Trade members vary in background from grain suppliers and IT services suppliers to brand and marketing consultants and beverage industry legal services. This networking opportunity is critical for new and veteran brewers alike.”
For those Texas brewers looking to join the political fight or simply get a little assistance in some day-to-day business operations, be sure to contact Vallhonrat and the team at the TCBG.