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Business Texas craft beer growing: Brewers pushing for more outlets

Texas craft beer growing: Brewers pushing for more outlets

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Craft beer fans have much to cheer when it comes to buying a glass, a growler or a six-pack of locally produced brews.

Craft breweries and brewpubs have morphed from a cottage industry to a lucrative niche market that continues to draw newcomers eager to put their own spin on brewing and building a devoted following.

The rush to get in on the craft brew craze has pushed the number of craft breweries in Texas up 990 percent during the last 12 years, from 20 in 2005 to 218 in 2017, according to data from the CBRE Group, the world’s largest real estate services and investment firm that tracks growth across industries and its impact on real estate.

Since 2005, the amount of industrial and retail space occupied by craft brewers has grown 265 percent to 4.8 million square feet across the state, according to CBRE.

Austin and Central Texas have led the craft beer explosion, but the Dallas-Fort Worth and Houston areas as secondary hubs have raised Texas to third place in the United States for economic output from craft breweries.

“Local is the new global,” said Robert Kramp, director of research and analysis for CBRE.

Craft brewing in Texas began in the 1800s. Perhaps the most enduring example of those early years is the Spoetzl Brewery in the small Czech-German town of Shiner in southeast Texas that opened in 1909. Just over 100 years later, its flagship Shiner Bock beer has helped this brewery account for 70 percent of the 1.1 million barrels of craft brew produced in Texas in 2016, Kramp said.

Texas now ranks eighth in the number of craft breweries with 201, according to the Brewers Association, a national organization of small and independent craft brewers. California is first with 623 and Colorado is second with 334.

The Texas Craft Brewers Guild, an industry organization for Texas craft brewers, lists 64 craft brewers in the Dallas-Fort Worth area. There could be more that are not members of the guild.

Local members range from restaurants that brew craft beer for their patrons to those such as Fort Worth’s Rahr & Sons Brewing that have successful commercial operations and taproom. Rahr, which has won multiple industry awards for its craft beers, opened in 2004, predating the local craft brewery boom that has picked up dramatically since 2013.

Among those who decided to jump into the business more recently were Greg McCarthy and Curt Taylor. The two opened Legal Draft Beer Co. in downtown Arlington in 2015. McCarthy, an attorney who continues to practice part time, and Taylor, a logistics expert, had been mulling the idea for several years.

“It’s something we were really passionate about,” said McCarthy. “We had the opportunity to do it and we took advantage of it.”

McCarthy, who refers to himself as the chief justice of Arlington’s first production brewery, said the goal was also to give Arlington a presence in the burgeoning craft brew market. The brewery produces six year-round varieties and two seasonal brews.

About the same time that Legal Draft opened, John Pritchett opened Wild Acre Brewing Co. in the former Ranch Style Beans complex south of downtown Fort Worth. The brewery’s name pays homage to the nearby site of Hell’s Half Acre, which was infamous in 19th century Fort Worth as a destination for “revelry and debauchery amongst renegade travelers and traders who helped build the economy” of the West, according to Wild Acre’s Facebook page.

Pritchett, who spent 18 years working in beer distribution, continues to raise millions of dollars to grow his operation. Among his contributors is Larry Anfin, former CEO of Coors Distributing Co. of Fort Worth.

“We want to be a full commercial operation,” said Pritchett. “We are very optimistic about the market. We’ve seen a lot of growth in the market but there’s still room for more.”

Josh Hare, chairman of the board of the Texas Brewers Guild and founder of Hops & Grain Brewing in Austin, said the explosion in craft breweries across Texas was the result of legislation that came out of the Texas Legislature in 2013 allowing breweries to sell beer from their taprooms.

“This is a very lucrative part of the business for many craft breweries and a great opportunity to build customer relations,” Hare said.

But the legislation was part of a compromise that protected distributors.

The result was a lawsuit filed by several craft breweries, including Revolver Brewing in Granbury (which was recently acquired by Tenth and Blake Beer Co., the craft and import division of MillerCoors) and Peticolas Brewing in Dallas, contending that the legislation was unconstitutional. With representation from the National Institute for Justice, the breweries won their case in a district court in Austin in 2016.

The Texas Alcoholic Beverage Commission, the state regulatory agency for the alcoholic beverage industry, appealed the ruling, which has kept the case tied up in legal proceedings. An appeal hearing was held in September.

The TABC’s three-tier regulatory system requires separation of manufacturing, distribution and sales.

Meanwhile, two cases are also progressing through the courts over other issues that limit the rights of craft brewers. The most recent case involves challenges a production threshold established under a new law that requires brewers to pay a distributor to deliver their beer even to their own onsite taprooms. “During the 2017 Texas State Legislative session, the elected officials enacted a new law defining a craft brewery as one producing less than 225,000 barrels annually; this production cap mandates any brewery producing more (including those with majority ownership by bigger breweries) will be required to employ a three-tier system of distribution, where a brewery will have to pay a distribution,” according to the CBRE report..

While only one Austin brewery is large enough to be affected, craft brewers say the law could stymie growth and discourage investment in their businesses.

The other lawsuit involves a regulation that prohibits craft brewers from selling to-go beer from their breweries.

All three cases share the complaint that the influence on lawmakers of the powerful beer distributors continues to benefit them against brewers, Hare said. The guild is not involved in any of the cases but supports its members in their legal battles.

“Texas is the only state in the U.S. that doesn’t allow breweries to sell beer to go from their taprooms,” Hare said. “The only one.

“Brewers call that unfair but wholesalers can call that leadership,” he said.

Despite some of those challenges, there’s little doubt Texans still love to lift a cold one, particularly a craft beer cold one.

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