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Business Trouble Brewing Texas craft beer makers have appetite for more sales

Trouble Brewing Texas craft beer makers have appetite for more sales

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Craft breweries have much to celebrate in Texas and across the country as consumer appetite for homegrown ales and lagers have fueled an explosion in their cottage industry.

But even as Texas craft brewers are toasting their success, they are crying in their microbrews over state laws that they say are stifling growth and undermining their profits.

Several lawsuits are pending over issues that some craft brewers say put them at a disadvantage in the marketplace.

In the latest development, newly opened Grapevine Craft Brewery joined as a plaintiff with Deep Ellum Brewing Co. in a federal lawsuit against the Texas Alcoholic Beverage Commission, contending that Texas’ alcohol sales law unconstitutionally discriminates against microbreweries but not allowing them to sell packaged beer from their breweries.

“Fans of our beer come to our brewery, they taste our beer and then they want to buy some and take it home,” said Grapevine Craft Brewery founder and owner Gary Humble. “But we have to tell them that they can’t do that – it’s illegal.”

The lawsuit contends that Texas liquor laws unfairly treat craft brewers differently than Texas brewpubs (restaurants that brew for their patrons), wineries and distillers that are allowed to sell packaged products from their manufacturing sites.

Humble said the lawsuit follows failed attempts to have the Legislature change state law. He and Deep Ellum Brewing Co.’s founder, John Reardon, blame “special interest” lobbyists for blocking legislation that would have lifted the ban on packaged sales at microbreweries.

A spokesman for the TABC declined to comment because of the pending litigation.

The Beer Alliance of Texas, representing Texas distributors, declined to comment on the lawsuit. The organization’s website states full support by beer distributors of the TABC’s three-tier regulatory system, requiring separation of manufacturing, distribution and sales.

That system mandates that craft brewers sell their packaged products to wholesalers, who distribute them to retail stores.

Rick Donley, president of the Beer Alliance of Texas, told the Houston Chronicle that the organization, which represents some of the largest Texas distributors, supported legislation in 2013 that opened the door for microbreweries to sell craft beer on site.

“They’re just never satisfied.…They want more, more, more,” he told the Houston newspaper.

To help pay for the legal battle, the craft breweries recently have launched Operation-Six-Pack To-Go, an IndieGoGo fund that has already raised more than $26,000 toward its $100,000 goal.

While other Texas craft breweries haven’t joined the suit, support for the cause is widespread, according to Brock Wagner, chairman of the board of the Texas Craft Brewers Guild.

“Every craft brewer in the state thinks it should be legal to sell beer for off-premise consumption,” said Wagner, founder of Houston-based Saint Arnold Brewing Co., the oldest craft brewery in Texas. “It is good for the industry, good for the economy and good for our customers.”

Wagner said growth in the craft brewery business has been explosive since St. Arnold shipped its first keg in June 1994. There are now more than 100 microbreweries operating in Texas, up from fewer than 60 in 2011, and new ones are continually opening, according to the Brewers Association, a nonprofit grade group for independent craft breweries. The trade group reports that the Texas craft beer industry has had an economic impact of more than $2.3 billion on the state’s economy. The state currently ranks eighth in economic impact from craft brewing.

Beer sales are big business in Texas. The economic impact of distributors is $2.53 billion in wages and salaries, accounting for nearly 66,000 jobs, according to the Beer Alliance of Texas.

North Texas Brew News

With more than 25 craft breweries in the Dallas-Fort Worth area, the industry is thriving and has received some noteworthy accolades attesting to its success.

Fort Worth’s Rahr & Sons won two gold medals in The Great American Beer Festival in September. Rahr & Son’s “Oktoberfest” took the top honor in the German-style marzen category and it’s “The Regulator” won in the German-style doppelbock or eisbock category.

The winning beers were chosen from more than 6,600 beers that were entered in this year’s festival. Rabbit Hole Brewing of Justin also took gold for its “Rapture Fusion Brown Ale,” an American-style brown ale.

Rahr & Sons will celebrate its gold-medal victory with a special ‘double gold’ tasting on from 1 to 3 p.m. on Saturday (Oct. 17). Attendees will receive a commemorative pint glass with gold ink to sample the two GABF-winning beers on tap while supplies last. There also will be live music and food available for purchase. Tickets are $10.

To celebrate its 11th anniversary, Rahr & Sons will release its new Russian Imperial Stout with Toasted Coconut during the week of Oct. 26. Tasting events for the new brew are scheduled Oct. 23-24. Tickets are for sale for both events. Tickets may be purchased at

www.rahrandsons-brewing-company.ticketleap.com. For more information, visit www.rahrbrewing.com.

Rahr & Sons’ owner, Fritz Rahr, attributes the high interest in craft beer to public preference for small, locally owned, homemade products of all types.

“A lot of people prefer going to locally owned, independent bars and restaurants over chains,” he said.

Grapevine Craft Brewery is also celebrating the spirit of the season with the release of Local 3113 Ockoberfest Style Lager. A portion of sales from this brew will support the Grapevine Professional Fire Fighters Local 3113, a labor organization.

Wal-Mart battles Texas over liquor laws

Beer brewers are not the only ones pushing the state to change alcohol laws.

Wal-Mart filed a lawsuit in federal court in Austin in February challenging a Texas law that prohibits publicly traded companies from selling hard liquor.

It will be a while before the lawsuit will be heard, however, so don’t start lining up to fill your blue shopping cart with Jack Daniels and MD 20/20. Reports say the suit will be heard in September of 2016.

Wal-Mart officials say they are seeking a “fair and level playing field so we can offer our customers a full assortment of adult beverages.”

Wal-Mart and Sam’s Club lead the state among retailers in beer and wine sales. They want to add a secondary store to existing Wal-Mart locations to sell liquor, which the retailer based in Bentonville, Arkansas, does in much of the rest of the country.

During the last legislative session, wholesale giant Costco joined Wal-Mart, Kroger and other retailers in requesting a change in Texas laws allowing public corporations to sell liquor in the state.

Texans for Consumer Freedom, a group formed earlier this year to lobby lawmakers to loosen restrictions on the state liquor market, fell short this legislative session. Despite the backing of some legislators, including state Sen. Kelly Hancock (R-North Richland Hills), their efforts fell short in the last session. – Robert Francis

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