From the Trib:
The Senate Business and Commerce Committee on Tuesday acted as legislative referee over bills that would allow craft breweries to sell on their premises and self-distribute in Texas, but critics said the legislation would hurt the state’s system of alcohol production and distribution.
“It’s two different visions of where the beer industry in Texas needs to go,” said Rick Donley, president of the Texas Beer Alliance.
State Sen. Kevin Eltife, R-Tyler, filed a package of bills in February that would make significant reforms to the Texas Alcoholic Beverage code and the state’s three-tiered system that regulates the production, distribution and retail sales of beer separately, dating to the end of Prohibition.
Eltife said the legislation also puts Texas brewers “on a level playing field with other states” in their treatment under the law. The change is strongly supported by the Texas Beer Alliance, which lobbies for major-brand beer distributors and some craft brews. Donley said the legislation supports the growth of craft breweries and addresses lawsuits surrounding the Commerce Clause.
The Texas Beer Alliance did not always champion these changes, but craft breweries have recently become the industry’s gold mine. “It is the only segment in the industry to show growth in the last four years,” Donley said.
But Eltife’s bills are being challenged by Senate Bill 639, filed by state Sen. John Carona, R-Dallas, and supported by the Wholesale Beer Distributors, which presents a host of complex changes to the code, centered on severability, reach-back pricing and distribution — problems that Carona’s staff argues go unaddressed in Eltife’s bills.
“For whatever reason, the working groups didn’t anticipate the issues that you find in 639,” said Steven Polunsky, Carona’s committee director. “If passing craft beer was easy, it would’ve been passed three sessions ago.”
With all due respect, the reason why this has been so difficult and so time-consuming is because there are entrenched interests at work. Big breweries and the big distributors have fought for the status quo because it’s a great deal for them, and they don’t want the competition. Thanks in part to a scaling back of their ask, a persistent grassroots campaign, and a welcome alignment with the Texas Beer Alliance, Sen. Eltife’s bills have a chance. Sen. Carona’s alternate bill is opposed by the craft brewers, the TBA, and as this AP story notes, the Texas Association of Business, the Texas Association of Manufacturers and Anheuser-Busch InBev as well. The Chron has more on what a pasting Sen. Carona’s bill took.
“That is very simply a government-sponsored price-fixing cartel,” Mario Loyola of the Texas Public Policy Foundation said in testimony before the Senate Business and Commerce Committee in Austin.
He cited a provision that would force manufacturers to charge one price to distributors statewide, regardless of varying market circumstances, but allow the distributors to sell to retailers at any price they wished. Supporters say this would clarify existing law and prevent dishonest dealing by brewers, but it was widely derided Tuesday
“From the consumers’ point of view, that’s the worst of all possible worlds, restricted output and higher prices at every level,” said Loyola, who has written for conservative publications and served as a state policy adviser to former Republican U.S. Sen. Kay Bailey Hutchison.
“In fact, the law, in our view, should be amended in exactly the opposite direction.”
In a crowded hearing room lined with craft brewers and other industry representatives, the lone supporter testifying for the measure, Senate Bill 639, was Randy Yarbrough of the Wholesale Beer Distributors of Texas.
State Sen. Leticia Van de Putte, D-San Antonio, politely grilled Yarbrough after noting that the wholesalers group had not raised these issues during a yearlong series of meetings that brought industry and legislative leaders together to hammer out legislation.
Another critic, Anheuser-Busch’s Dallas-based region vice president of sales Keith Diggs, pointed out that in other states where such pricing mandates have been enacted, consumer prices increased markedly. He said SB 639 ignores that “what goes on in East Texas is not the same as what goes on in Brownsville, Texas.”
Ouch. The thing is, the Wholesale Beer Distributors don’t need a bill to pass to win – they just need to play defense. Filing Carona’s SB 639 was an extra layer of defense, and perhaps a sign that this time they’re worried. But it’s still easier to kill bills than to pass them, and just because there’s been progress doesn’t mean there will be success. Keep letting your Rep and your Senator know that you support a genuinely free market for beer in Texas. Open the Taps presented written testimony for the Eltife bills and has a recap of the hearing, and the Rivard Report has more.