Texas brewers were dealt a blow this afternoon when House Bill 3287, which seeks to limit breweries that grow beyond a certain size or become owned by a larger beer company, passed the Texas Senate by a 19-10 vote.
The bill will now head to the governor’s desk to be signed into law, but the Texas Craft Brewers Guild, representing the state’s breweries, isn’t ready to give up yet and has announced that it will continue to fight against it in the hopes of a veto from Texas Governor Greg Abbott.
“This bill will put a ceiling on success for the 200+ craft breweries operating in Texas and will slow the future growth of what has become an important burgeoning manufacturing industry in our state,” the guild wrote in a statement published on Facebook shortly after HB 3287 passed.
HB 3287, pushed by wholesalers through the trade groups Beer Alliance of Texas and Wholesale Beer Distributors of Texas, will change the Texas beer code in the following ways.
Breweries making 225,000 barrels of beer per year (a calculation that includes the amount of barrels from any affiliate brewery with a 25 percent or more stake in the company) cannot operate a tasting room.
There are exceptions to this rule, however. Current breweries over this limit have been grandfathered in and will still be able to keep their taproom doors open, but they and future breweries eligible for exception have to pay their distributor for all beers they sell in their taprooms. Austin’s Oskar Blues Brewery is affected, and any future taproom locations of breweries like Houston’s Karbach Brewing — now owned by Anheuser-Busch — will also have to pay up. They can have up to three tasting rooms.
Self-distributing breweries can only self-distribute a total of 40,000 barrels across all locations; anything above that has to be sold through a distributor. In other words, single-premises breweries like Austin Beerworks and Live Oak Brewing can only expand so much if they want to keep their independence from the wholesale tier.
But wholesalers argue that the bill prevents large multinational breweries from “gobbling up” Texas’ small craft breweries and having “access to multiple taprooms across the state,” Rick Donley, representing the Beer Alliance, said at a previous committee hearing. That sort of access would be a violation of the three-tier system.
It’s “a system that “has allowed for an incredibly competitive marketplace and allows smalls breweries to thrive in a way that other commodities can’t do because of the inability to get to market without a distribution tier,” Keith Strama, counsel for the Wholesale Beer Distributors of Texas, later said in the same hearing.
The only hope now for brewers to be able to sell beer to-go from their taprooms is a lawsuit that Dallas-Fort Worth’s Deep Ellum Brewing and others have lodged against the Texas Alcoholic Beverage Commission, a case currently still tied up in the courts. Texas remains the only state in the U.S. that doesn’t permit its breweries to offer packaged beers for off-premise enjoyment.
UPDATE: The controversial Texas bill aiming to regulate the growth of the state’s breweries passed the Texas House of Representatives this weekend and faces a Senate vote later this week.
HB 3287, vehemently opposed by Texas craft brewers and pro-business groups, underwent key changes before being passed overwhelmingly in the House. Now, breweries like Oskar Blues making 225,000 barrels of beer per year or more are able to operate taprooms, but they must sell their beer to a distributor first and then buy it back for sale in their taprooms. The payment is essentially a tax on brewery sales.
The legislator behind the bill, state Rep. Craig Goldman, R-Fort Worth, argued that it prevents mega breweries from gaining too strong a hold in Texas, but the opposition from state brewers believe the bill actually hurts their small businesses.
An amendment to allow sales of beer to-go in the taproom was proposed but ultimately did not pass. Texas winemakers and distillers are able to sell their products directly to customers for off-site consumption, and the state remains the only one in the U.S. that does not allow to-go taproom sales.
House Bill 3287, which has the full support of distributors, seeks to change the language of Texas law that allows breweries making no more than 225,000 barrels of beer per year to sell beer directly to consumers in their taprooms. That number is measured based on production at a single location, but the bill and its sister Senate Bill 2083 would now count premises “owned directly or indirectly by the license holder or an affiliate or subsidiary.”
In other words, “if a brewery is financially connected to another brewery (either in or out of state), then the production at all breweries is considered when totaled and compared to the 225,000 barrel cap,” according to Texas Craft Brewers Guild Executive Director Charles Vallhonrat. The organization, created to lobby for the interests of Texas craft brewers, came out against HB 3287 at a committee hearing last night.
The bill immediately affects three Texas breweries, including Austin’s own Oskar Blues, a brewery with additional locations in Colorado and North Carolina. DFW’s Revolver Brewing and Houston’s Karbach Brewing, purchased last year by MillerCoors and Anheuser-Busch InBev, respectively, also don’t make the cut.
Authored by Rep. Craig Goldman, R-Fort Worth, HB 3287 appears primarily to benefit distributors in the state. They worry that the purchase of Revolver and Karbach by very large beer conglomerates harms the three-tier system ruling the flow of alcohol from producers to retailers to consumers. Distributors are the middlemen bringing the beer from the breweries to bars and stores, where customers can then purchase it.
With AB InBev scooping up Karbach, which has a restaurant and biergarten serving 2,000 to 3,000 guests per week, distributor trade groups Wholesale Beer Distributors of Texas and the Beer Alliance of Texas argue that the beer behemoth is able to sell beer directly to consumers.
“The main issue is to defend the system from larger breweries entering all three tiers,” Keith Strama, counsel for the Wholesale Beer Distributors of Texas, said at the committee hearing. He added that not doing so could cause a vertical monopoly.
But that’s not how organizations like the Texas Craft Brewers Guild see it.
“This approach is like using a sledgehammer to kill a fly,” Josh Hare, owner of Hops & Grain and board chairman of the guild, said at the committee hearing. “We believe there is a better path for protecting small businesses in Texas without immediately placing a ceiling on their growth potential.”
His brewery — which is opening an additional facility in San Marcos that will still put Hops & Grain well under the 225,000 barrel cap — isn’t directly affected by HB 3287, but Vallhonrat said there’s an intangible downside to the bill as well.
“All manufacturing breweries operating tap rooms can and should consider their tap room as a major asset of their business,” he said. “Independent of any outside interest from a larger brewery to acquire one of our members, the fact that it could, and has, happened means tap rooms have distinct value. That value can be used in seeking other lines of funding or credit, despite being quite intangible. By eliminating that asset from even a theoretical transaction, something of value is being taken away from our members.”
The guild is most worried about Oskar Blues Brewery, which chose to open a new facility in Austin last year because of the city’s quirky, irreverent vibe and deep love of live music. Oskar Blues founder Dale Katechis said at the hearing that he wouldn’t have considered the move if this bill had been in the works back then.
Other large craft breweries won’t consider an expansion here in the future, either, Hare said.
“Taprooms have become an integral part of brewery culture, but most importantly, they’re the most effective, direct and hands-on way that we can market our product,” Katechis said. “If (HB 3287) passed, I have to think we’d be forced to lay off at least some of the employees that work there. I don’t understand how that’s even conscionable.”
“The Founder” Founders Beer Dinner, 7 p.m. Wednesday, Feb. 1. The Alamo Drafthouse is screening the McDonald’s origin story, now in theaters, with a themed menu and pairings from Founders Brewing. $64.95.
Beer, Babies and Boobs at Zilker Brewing, 5 to 8 p.m. Thursday, Feb. 2. Drink Zilker’s Coffee Milk Stout to help out a good cause: Mother’s Milk Bank at Austin is getting a portion of the stout sales.
South Austin Brewery’s 3 Year Anniversary, 12 p.m. Saturday, Feb. 4. A special anniversary beer, food trucks like Kebabalicious, and live music from Full Service Circus and more await at this big celebration.
Austin’s Hill Country Wine Tasting, 3 to 7 p.m. Saturday, Feb. 4. Take this interactive tour of Texas wines (William Chris Vineyards, Perissos Vineyard & Winery, and more) paired with local bands at the Gatsby bar. $45-$80.
Half Step’s 3 Year Anniversary Party, 8 p.m. Saturday, Feb. 4. Celebrate the birthday of one of Rainey Street’s most esteemed cocktail bars with Stiles Switch BBQ, live DJ music and ginger palomas.
Second Annual SOUPer Bowl Watch Party at Craftsman, 4 to 9 p.m. Sunday, Feb. 5. Several participating breweries will make a soup, stew, gumbo or chili using one of their beers, and you’ll vote on your favorite after tasting samples of each. Oh, and watch the game, too.
Super Bowl Party at Whitestone Brewery, 5 to 10 p.m. Sunday, Feb. 5. The Cedar Park brewery will have games, snacks, drink specials and a raffle benefiting Heroes Night Out, in addition to the big game playing on multiple screens.
Rosé Party at Irene’s, 4:30 to 6:30 p.m. Wednesday, Feb. 8. Relax on the patio with your first glass or bottle of rosé of the season. California-based Lorenza is also launching in Austin at this party.
The Craft Series at the Driskill, 6 to 9 p.m Monday, Feb. 13. The monthly beer dinner at the 1886 Cafe & Bakery will feature South Austin Brewery this time. Make reservations, but you won’t pay until after the meal. $40.
Valentine’s Mega Mutt Monday at Banger’s, 6 to 9 p.m. Monday, Feb. 13. This extra-romantic version of the dog-friendly event will have all-day happy hour, live music and a puppy kissing booth with Heart of Texas Lab Rescue.
Cookies and Beer at the Whip In, 7 to 10 p.m. Wednesday, Feb. 15. This sweet pairing will feature Girl Scout cookies and beer from Hops & Grain, AleSmith Brewing and Goose Island Brewing.
2nd Annual Sausage Kings of Austin, 6 to 9 p.m. Thursday, Feb. 16. At St. Elmo Brewing, several sausage purveyors will compete for your vote, while you sample their wares and two beers from St. Elmo. $26.
Vigilante Grand Opening, 4 to 7 p.m. Friday, Feb. 17. The gaming bar is officially opening with free game rentals and other goodies – for real this time.
Strange Land Brewery’s 2nd Anniversary Party, 5 to 10 p.m. Saturday, Feb. 18. Your $20 ticket will get you commemorative glassware, two full pours of any beer (including limited-release, small-batch stuff), a slice of beer cake and more.
Brews & Brunch at Hopfields, 11 a.m. to 3 p.m. Sunday, Feb. 19. Sip on flights of beer like the (512) Brewing Cascabel Cream Stout with floaters of Chameleon Cold-Brew.
Its arrival means that Austin is now the home to one of the country’s largest craft breweries: Oskar Blues ranks as the 14th biggest brewery in the U.S., according to the Brewers Association. None of Austin’s other breweries come close in terms of sales. But the brewery aims to fit in here, not stick out.
And Oskar Blues is doing that already, by offering the sort of place locals would want to visit. The brewery’s Tasty Weasel taproom, at a sprawling 5,000 sq. ft, has plenty of seating inside as well as outside on a long deck, and the taproom’s central feature is a stage where bands will play five days a week beneath a colorful mural designed by SprATX, a collective of street artists and muralists.
The space, at 10420 Metric Blvd., also hearkens back to its former recycling center roots, as the taproom is a mixture of new and salvaged pieces — such as the wall to the right of the stage where vintage speakers stack tall.
Like Oskar Blues’ other locations in Colorado and North Carolina, this one will “probably take on a life of its own because of the people who work here,” Chad Melis, Oskar Blues’ marketing director, said. “They’ll build a culture that’s unique to this place.”
At the same time, the Austin brewery — capable of producing more than 100,000 barrels of beer per year, although its initial capacity is much smaller — fits easily into the fun-loving vibe of the brewery’s other locations. Choosing Austin as Oskar Blues’ next city had been an easy decision for employees.
“Elements of Austin were already in the fabric of Oskar Blues,” brewery founder Dale Katechis said on a June visit to the Austin location. “Irreverence, authenticity, live music. That’s one of the reasons coming here gained momentum naturally early on. We didn’t have to spend time on buy-in, which is good because with our company, the pirates run the ship.”
At the moment, Oskar Blues’ Austin outpost has only four of its 14 total canned options available at the taproom for $4: Dale’s Pale Ale (the flagship), Pinner Throwback IPA, Oskar Blues IPA and Mama’s Little Yella Pils. Eventually, however, visitors will have many more beers to choose from, including some of those same ones on draft. Food trucks will provide the grub.
And on Sept. 17, the brewery plans to throw an official grand opening party. If Oskar Blues’ annual Burning Can “Extravacanza” is any indication, it’ll be a celebration worth attending.
Oskar Blues is opened from 4 to 8 p.m. daily, although these hours will expand to 12 to 10 p.m. daily once the brewery gets draft approval. For more information, visit oskarblues.com.