Craft Brewers Fight House Bill That Caps Tap Room Sales | KERA News

Craft Brewers Fight House Bill That Caps Tap Room Sales

May 9, 2017
Originally published on May 9, 2017 2:12 pm

From Texas Standard:

The cooler in your local gas station or grocery store is now a much more colorful place than it once was. Texans who like to bend the occasional elbow are still riding the wave of the craft beer boom.

 

Many startup breweries have flourished in the Lone Star State. But they're united against a bill in the Texas House of Representatives that they say would hurt business. On Saturday the House passed a measure that would restrict which breweries could sell beer on site.

Ronnie Crocker, a business reporter and beer blogger for the Houston Chronicle says the House's action places an unwelcome limit on the amount of beer a company can sell via a brewery tap room.

"Four years ago, the legislature agreed to a series of new beer laws that would allow brewers for the first time to sell a limited amount of their beer at their brewery, through a tap room," Crocker says. "At that time, they set a limit on the size of the brewery that could do this – 225.000 barrels of annual production. This law would take that limit and apply it to the owning company."

The bill would also add a level of complexity for brewers.

"What would happen under this bill – in order to sell a beer at their tap room," Crocker says "they would have to sell that beer to a distributor and then the distributor would then sell it back to the brewery at a markup."

Craft brewers and large companies that have acquired them, including industry giant Anhueser-Busch, say this change would hurt the craft brewing business.

"What the craft brewers are saying, and what Anhueser-Busch is saying, is that this change makes their breweries less valuable," Crocker says.

Crocker suspects that if the new law is enacted, consumer prices for craft beer purchased at the brewery could increase.

"You may see the price of your beer go up, because it would have to reflect the premium that's being charged for the distribution," he says.

Lawmakers who support the new bill say that the three-tier distribution system (brewers, distributors and retailers) that has applied to beer and other alcohol since the end of Prohibition, should be maintained. Crocker says craft brewers feel they need the exemption from that system that allows them to sell directly to customers from brewery tap rooms.

Crocker says craft brewers, including Josh Hare with Austin's Hops and Grain brewery testified against the House bill, pointing out that tap room sales account for a significant portion of their revenue.

Crocker quotes Hare as saying that 35 percent of Hops and Grain sales come from the tap room.

 

Written by Shelly Brisbin.

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