Craft brewers and beer distributors have reached a compromise on beer to-go legislation. Is it a victory for Texas consumers?
It’s a fight that has been waging on in the background of the Texas Capitol for years. Small craft beer breweries have battled with a goliath in mega-breweries and beer distributors for the right to sell “beer to-go” at their own breweries.
For those who haven’t followed the saga, it boils down to this: When a patron visits one of Texas’ 200-plus craft breweries, they can often sample some suds in the onsite-taproom. As the visit winds to a close, many visitors (especially those from out-of-town) will often ask if they can grab a six-pack of their favorite brew to take home with them and share with friends.
That’s where the problem is. You see, under Texas law, such an act is illegal.
The history goes back to the early 20th century. As Prohibition came to an end, states, including Texas, established a “three-tier system” which separated brewers, distributors, and retailers as a means to regulate the sale (and artificially increase the price) of alcohol. The laws were written in a way so that a big brewer like Anheuser-Busch or MillerCoors could not create their own bar and sell alcohol freely and cheaply, which effectively enshrined the business practices of booze smugglers and criminal gangs into law.
And because Prohibition had choked out most of the nation’s beer producers, this arrangement led to the establishment of the macro-breweries that produce Budweiser, Miller, and Coors as the nation’s only real source of beer carried by distributors. This resulted in smaller breweries failing to produce the volume necessary to make it worth the distributors’ time.
In Texas there are only a small handful of distributors and, in many areas, there can be only one due to the extremely high startup costs and regulatory barriers to entry. Consequently, the distributors have regional monopolies over the industry.
But according to a greater number of beer drinkers, that monopoly led to inferior beer products, leading to a craft beer craze that swept through the nation as drinkers sought out brews of different styles and types not produced by the macro companies.
They found breweries willing to produce the beer, and as distributors started to carry them they also spearheaded a few changes in the law to make it easier for them to operate. The result is a thriving resurgence in craft beer that’s led to enormous economic opportunity for brewers, distributors, and retailers alike.
But it isn’t all peaches and cream. While other states have tweaked their alcoholic beverage codes to reflect the modern landscape, Texas is the last state in the nation to ban the sale of beer to-go at small breweries.
Last year, however, craft brewers united to form CraftPAC, a political action committee from the Craft Brewers Guild created “to protect the rights of Texas breweries and to champion common sense, 21st-century legislative reforms.”
Craft brewers created momentum for their beer to-go proposal, growing tremendously during the interim. When the legislature returned in January, the group had two identical bills filed in the Texas House and Senate by State Rep. Eddie Rodriguez (D–Austin) and State Sen. Dawn Buckingham (R–Lakeway).
“Texas craft brewers should have the right to sell beer and ale to consumers for off-premise consumption, a privilege the state already provides to wineries, distilleries, and brewpubs in Texas,” Buckingham said after filing the bill.
While the bills gained support in the Texas Capitol, negotiations were going on behind-the-scenes between the Texas Craft Brewers Guild and the Texas Beer Alliance, the group representing the beer distributors. In recent weeks, a backroom deal was struck between the two groups over the legislation and made official during a press conference with lawmakers on Tuesday.
According to the terms of the agreement, small brewers can sell a maximum of two cases of beer per person per day. In exchange, the Craft Brewers Guild has agreed not to lobby to change restrictions on the number of barrels they are able to produce and sell for the next twelve years.
While the bill still must go through the legislative process, it appears as though the compromise could potentially work, as it has wide-ranging bipartisan support of lawmakers in both chambers.
But is the deal a true victory for Texas consumers?
While Texans will finally be able to buy beer to-go directly from their favorite local taprooms, the tradeoff made by the Craft Brewers is heavy. No lobbying for twelve years to change restrictions on production? And no change to the amount of taproom sales currently allowed? No other changes to the restrictive three-tier system that has suffocated newcomers to the industry for decades?
Such a compromise would be more easily understood if the Craft Brewers Guild was in same position it was two years ago. But with new branding and lobbying efforts, support for beer to-go and the craft beer industry as a whole is growing and public support is mounting on legislators to act. While no one is able to predict with absolute certainty what could have happened in the unpredictable Texas Legislature had a deal not been brokered, it appeared as though beer to-go could have stood a chance to pass without a compromise that traded away brewers’ bargaining power.
In a negotiation, leverage is everything. Growing public support for looser laws on craft breweries could have been the leverage needed to get beer to-go over the finish line while maintaining the ability to push for additional measures next session. Instead, it appears much of that leverage has been traded away for immediate gratification.
The compromise agreement, if a pyrrhic victory, is a victory nonetheless for consumers in the short-term. The legislation, however, still has a long way to go before it’s signed into law and Texans can start to bring beer home with them from their favorite craft brewery.
In other words, don’t toast those celebratory craft beers just yet.
