Texas Craft Brewers, Wholesalers Reach Compromise on Brewery To-Go Sales

Texas’ craft brewers and wholesalers have agreed to a compromise in the years-long debate over to-go beer sales at manufacturing breweries.

A “stakeholder agreement” announced Wednesday evening by the Texas Craft Brewers Guild, which represents the state’s nearly 300 craft breweries, and the Beer Alliance of Texas, a powerful wholesaler lobbying group, has the potential to finally legalize off-premise sales at the Lone Star State’s manufacturing breweries.

As part of the deal, a pair of beer-to-go bills filed in the Texas Legislature last monthSenate Bill 312 and House Bill 672 — would be replaced by substitute bills with language that would allow consumers to purchase up to two cases of beer (576 fl. oz.) per day, from manufacturing breweries, for off-premise consumption. Those sales would count against an existing 5,000-barrel cap on on-premise taproom sales at those beer companies.

Both trade groups also agreed to a 12-year moratorium against lobbying the Legislature to adjust barrelage caps or the limit on the amount of beer sold to-go.

Additionally, the brewers agreed to file monthly barrelage reports with the Texas Alcoholic Beverage Commission (TABC) listing total on- and off-premise sales. The agreement also requires beer companies to post the alcohol content of products sold in their taprooms without approved labels.

The original bills’ sponsors — Sen. Dawn Buckingham (R-Lakeway) and Rep. Eddie Rodriguez (D-Austin) — will swap out the existing bills in their respective committees.

Beer Alliance of Texas president Rick Donley told Brewbound that lobbying for the substitute bills has already begun.

“We will do our best to push it through and live up to the agreement, and see it all the way through to its signing by the governor,” he said.

According to Donley, “many members of the Legislature” had pushed his organization for a compromise on the issue. He added that “negative social media” and “pretty vicious news items” also led the Beer Alliance to the negotiating table in an effort to “calm the waters.”

“We have been dealing with this subject for a long time, and we just felt it was time to put it behind us, let everybody get back to promoting and selling beer, which is what we ought to be focused on,” he said.

Texas Craft Brewers Guild executive director Charles Vallhonrat told Brewbound that negotiations lasted “less than 10 days.” He added that the established caps will help new breweries map out their business plans and evolve as they grow.

“Ultimately, I think there’s a good amount of bandwidth in our caps,” he said. “Having the beer-to-go capabilities gives some people a little bit more flexibility between the choice of being a brewpub or being a brewery.

“We’ve given them a growth path that they did not have before,” he added.

Donley told Brewbound that the wording of the agreement against lobbying to adjust the existing caps is “pretty tightly drafted” and prohibits the trade associations as well as political action committees, affiliates and any third parties representing those groups from breaching it. That agreement, Donley and Vallhonrat agreed, provides “market stability” for brewers and wholesalers.

“It’s pretty difficult if you don’t know what the rules of the game are from one two-year cycle to another,” Donley said.

Both Donley and Vallhonrat acknowledged that lawmakers could still alter the language of the legislation, which could threaten their peace accord.

“We fully anticipate that something could come up, and we will defend the language that we are bringing into the committee sub,” Vallhonrat said.

Donley stressed the importance of the agreed upon deal staying intact throughout the process.

“There’s no way of tying the Legislature’s hands, but at the same time, if it’s substantively violated the spirit of the agreement, all bets are off,” he said. “We’d have to analyze that at the time, but we don’t anticipate that occurring.”

Nevertheless, noticeably absent from the agreement is another powerful beer wholesaler lobbying group, the Wholesale Beer Distributors of Texas (WBDT). Executive director Tom Spilman did not return a request for comment from Brewbound. However, he told the Texas Tribune that his organization is still operating under a 2013 agreement with the guild that created “exceptions for small brewers” that did not include to-go sales, which he said “would unfairly compete with our retail customers.”

Vallhonrat and Donley both told Brewbound that the WBDT was invited to join discussions about reforming the law, but ultimately the group didn’t sign on.

“We obviously would love to have them sign on and support it,” Donley said.

“We want to work with them,” Vallhonrat added, “but if we can get them to neutral, even, we’re happy.”

Even without the WBDT’s support, both trade associations are optimistic that the new bills will successfully survive the legislative process.

“It’s like going to Las Vegas and rolling the dice,” Donley said. “But we feel pretty good. We’ve had very positive responses from members of the Legislature. They don’t like being stuck in the middle and refereeing these kinds of disagreements.”

Those disputes have been going on since at least 2015 when Dallas-based Deep Ellum Brewing filed a lawsuit against the Texas Alcoholic Beverage Commission (TABC) arguing that not allowing manufacturing breweries to sell beer-to-go put them at a competitive disadvantage.

In 2017, Texas brewers fought to legalize to-go sales but bumped up against the powerful beer wholesaler lobby, which successfully pushed through changes that required craft breweries making more than 225,000 barrels a year to repurchase beer previously sold to wholesalers in order to continue selling beer for on-premise consumption in their taprooms.

A year later, the Texas Craft Brewers Guild launched CraftPAC, a political action committee aimed at overturning the state’s “archaic, anti-competitive beer laws.” Just six months after the formation of the PAC, Texas Democrats and Republicans included language in their respective party platforms supporting the legalization of off-premise sales privileges for manufacturing breweries — sales privileges currently enjoyed by the state’s brewpubs, wineries and distilleries.

Finally a step closer to change, Texas’ craft brewers say they are encouraged about the chances of to-go beer becoming a reality.

“To-go sales is what we’ve been working on since long before I had a brewery,” Deep Ellum founder John Reardon told Brewbound via text. “It was the subject of my lawsuit, and I’m feeling really good about the bipartisan support. We all knows it’s what the Texas consumers want.”

For his part, Donley told Brewbound that he doesn’t anticipate the proposed changes having “a significant effect on the total beer market.”

A press release with additional details is also included below.

TEXAS CRAFT BREWERS GUILD, BEER ALLIANCE OF TEXAS REACH HISTORIC AGREEMENT ON BEER-TO-GO BILLS

AUSTIN, Texas (February 13, 2019) — The Texas Craft Brewers Guild (TCBG), the trade association representing nearly 300 small and independent Texas craft breweries, and the Beer Alliance of Texas (BAT), a trade association representing malt beverage distributors across Texas, have reached a stakeholder agreement on SB 312 and HB 672, the bipartisan Beer-To-Go bills currently filed in theTexas Legislature.

With the endorsement of both the TCBG and BAT, soon-to-be-filed committee substitutes of both bills, authored by Senator Dawn Buckingham (R-Lakeway) and Representative Eddie Rodriguez (D-Austin), would, if passed, allow patrons to purchase up to 576 ounces (two cases) of beer per calendar day from a craft brewery tasting room for take-home consumption.

“I am proud to be part of a win-win agreement for every level of the three-tier system,” Senator Dawn Buckingham said. “This is a big step forward for small Texas breweries and the consumers who enjoy their products. I am grateful to both the Beer Alliance of Texas and the Texas Craft Brewers Guild for their willingness to reach a fair agreement for both sides of this important issue.”

Brewer-wholesaler unity on the bill is bolstered by support from both sides of the aisle. At their 2018 conventions, both Texas Republicans and Democrats included support for Beer-To-Go in their respective party platforms.

“Allowing ‘beer-to-go’ sales is a common-sense issue that both Republicans and Democrats agree on because it’s good for small business and has come to be expected by consumers,” Representative Eddie Rodriguez said. “Texans are incredibly excited about ‘beer-to-go’ as the public support for HB 672/SB 312 has shown, and I am glad that the Texas Craft Brewers Guild and the Beer Alliance of Texas have come to the table.”

In an effort to foster regulatory stability for the industry, the Texas Craft Brewers Guild and the Beer Alliance of Texas have also agreed to refrain from lobbying to raise or lower allowable Texas malt beverage barrelage caps for a period of 12 years.

“The Beer Alliance of Texas has always worked to ensure a strong malt beverage market in Texas,” Beer Alliance of Texas President Rick Donley said. “We have committed to working with our friends in the craft-manufacturing segment on sensible regulations that provide for a stable and predictable three tier market in Texas that continues to be recognized as the gold standard for regulatory structures across the country.”

TCBG and BAT applaud Senator Buckingham and Representative Rodriguez’s commitment to setting craft brewers on a more equal playing field with Texas wineries, distilleries, brewpubs which are all permitted to engage in to-go sales as a brand-building, tourism-boosting opportunity.

“The Texas Craft Brewers Guild is proud to promote a sensible alcohol regulatory framework that encourages competition, consumer choice and access to market for brewers in our great state,” Texas Craft Brewers Guild Board Chair Josh Hare said. “We are excited to be working with the Beer Alliance of Texas to promote common sense regulations that ensure the beer industry in Texas will continue to thrive. We look forward to the opportunity to provide consumers with greater access to Texas made beer while ensuring a predictable and effective three-tier system.”

Key Points of the SB 312/ HB 672 Agreement:

  • Retain the 5,000 barrel cap on taproom sales.
  • Allow sales for off-premise consumption in amounts up to 576 fluid ounces per calendar day, per person.
  • Any product offered for sale in the taproom which does not have an approved label must post in plain view the alcohol content of that product.
  • The total amount of on and total amount of off-premise sales shall be reported (in barrels) to TABC on a monthly basis. The Commission shall hold the records for public review.

So far, more than 12,000 Texans have signed an online petition urging the Texas Legislature to pass BeerTo-Go this session. People who would like to join the cause can visit www.craftpac.org/action.

ABOUT THE TEXAS CRAFT BREWERS GUILD

The Texas Craft Brewers Guild is the not-for-profit trade association committed to advancing the common interest of Texas craft brewers. The Guild’s Board of Directors hail from craft breweries in all the major metropolitan regions of the state, as well as different brewery types and sizes to represent the Guild’s nearly 300 brewery members throughout the state, including operating breweries, as well as those that are in the advanced planning stages. The Texas craft brewing industry has a $5.28 billion dollar economic impact on the Texas economy, responsible for the creation of approximately 30,000 jobs.

ABOUT THE BEER ALLIANCE OF TEXAS

The Beer Alliance of Texas is a trade association representing malt beverage distributors across Texas, from the high plains to the coastal region to the Panhandle and West Texas to the Rio Grande Valley. The wholesale beer business employs more than 65,000 Texans with a $2.5 billion payroll, contributing almost $1 billion in state, local and federal taxes. Our members strictly adhere to today’s state-based regulatory model, including maintaining the three-tier system, while exploring new technologies and marketing to better serve the interests of Texas retailers and consumers in the malt beverage industry.

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