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Brock Wagner

Saint Arnold’s silver anniversary

A very happy anniversary to them.

There is nothing particularly unique about the start-up story behind Saint Arnold. [Founder Brock] Wagner, 54, had been working as an investment banker when he decided to chuck the suit and tie and try to open up a brewery. It’s the same origin story repeated on what feels like a weekly basis here in Houston these days, as side-hustle brewers ditch their full-time corporate gigs to start small brew shops. This year alone has seen similar tales told at both True Anomaly Brewing and Walking Stick Brewing Co.

What sets Saint Arnold’s story apart is the fact that it’s been able to survive all these years, even through a long period during which the state of Texas had some of the nation’s most antiquated brewery laws. When Wagner sold his first keg of beer on June 9, 1994, it was illegal to sell beer on-site. Or offer tours. He had to rely on sales at bars, but he wasn’t even allowed to promote those.

“The laws in Texas made it so the chances are, you weren’t going to survive,” he says now. “And that is why we’re the oldest craft brewery in Texas. It’s not because we were first. We weren’t. It’s because we outlasted everyone else.”

[…]

“There was a time, in about 1995 or 1996, that there were actually a lot of brew pubs in Houston. And every single one of them failed,” Wagner says. “We’d get together every month at our locations, and we’d share information and drink beers together. Then that went away for the longest time because if you were going to have a Houston craft brewers’ meeting, it would be me sitting at a bar by myself.”

He blames the laws, among other things. So he split his focus. Wagner began lobbying the Legislature to loosen up the arcane laws, nabbing a huge victory in 2013, when brewers won the right to sell beer on premises. At the same time, the brewery doubled down on consistency of beer and quality. Wagner pushed his brewers to make sure each new recipe met two criteria: It made you want to order a second, and it had some sort of “wow factor” — maybe extra-dry hops, a rush of citrus — that set it apart from other beers already on the market.

But what really enabled Saint Arnold to shift gears from surviving to thriving, as it now produces 70,000 barrels a year, Wagner says, is the idea that the brewery belonged to more than just him.

I’ve been a fan and customer of Saint Arnold since the days at the old location off 290 when tours were still free and the line to get in wasn’t that long. (Heck, I had my 40th birthday party at the old location.) The current location north of downtown is a gem, and I love that Brock Wagner supports other breweries, especially those opened by former employees of his. Craft breweries belong to neighborhoods, and there’s plenty of room for more of them in our ginormous metropolitan area. They should all hope to be as good, and as consequential, as Saint Arnold. Cheers, y’all.

Beer legislation 2.0

Just because craft brewers succeeded in passing a bill allowing them to sell beer for consumption on their premises last session doesn’t mean there isn’t more that can be done to advance the cause of beer freedom.

TexasCraftBrewersGuild

Twinned bills introduced this week would extend direct sales for breweries. The proposals by state Sen. Kevin Eltife, R-Tyler, and state Rep. Jim Keffer, R-Eastland, would let customers buy beer that they could take away and drink later.

“This gives Texas breweries the same rights already enjoyed by wineries, distilleries and many of their out-of-state competitors,” Keffer said in a written statement distributed by the Texas Craft Brewers Guild.

Under the bill, consumers would be restricted to a single purchase of no more than the equivalent of two cases of beer each month at a brewery. Advocates say this type of “souvenir” beer, often sold following tours or special events, can be an effective marketing tool.

“This legislation is designed to finish what we started last session and bring people from around the country to this state which is rapidly becoming the epicenter of craft brewing quality,” Eltife said in the statement from the Brewers Guild.

[Rick] Donley said the Beer Alliance [of Texas] is still digesting the details of this and other legislation affecting alcohol sales in Texas, but he sounded skeptical.

The Beer Alliance and major wholesalers have contributed many hundreds of thousands of dollars to numerous political campaigns in Texas since the beginning of 2013. Major recipients include Gov. Greg Abbott and Lt. Gov. Dan Patrick, but the Beer Alliance of Texas PAC also gave a total of $5,000 to Eltife in June 2013, Texas Ethics Commission reports show.

Donley said it has been only a year and a half since the most recent law changes went into effect, and his organization would like more time to see how that plays out in the marketplace.

He also said he thinks the two-case-per-month limit is too high and he would want an annual cutoff on how much breweries could sell this way. The exemptions approved in 2013 limited breweries to selling no more than 5,000 barrels of beer on site. While the bill currently does not specify an annual limit, a spokesman in Eltife’s office said the 5,000-barrel limit would still apply to all beer sold on site, whether it was sold for on- or off-premise consumption.

Donley said the ongoing success of Texas craft brewing further suggests the industry does not need additional help.

[…]

Brock Wagner, owner and founder of Houston’s Saint Arnold Brewing Co., insisted the craft brewers are not seeking to replace traditional retailers. Rather, he said, this legislation would address the most common question from tour and special events visitors – why they are not allowed to buy beer to take home – and boost awareness of the brands.

Wagner also said lawmakers are probably more inclined to view craft brewers as important small businesses that deserve the state’s support.

See here and here for some background. As noted by the Texas Craft Brewers Guild, the bills in question are Senate Bill 1386 and House Bill 3086. I understand the Beer Alliance’s hesitation – and it should be noted that they were among the good guys in 2013 – but it’s still crazy when you think about it that brewers can’t sell a six pack or two to the people that come to visit their facilities. It would be one thing if there were a blanket prohibition on all forms of booze, but that’s not the case – Texas’ wineries and distilleries can sell bottles on site. So can microbreweries in other states. What Texas does makes no sense, and it’s all about what the big brewers and distributors want. The difference between the faith in free markets that people constantly proclaim in this state and the actual freedom of some specific markets never fails to boggle my mind.

Anyway. As those links above point out, there were other issues that the 2013 legislation did not address that remain untouched by these bills. Licensing fees remain high, and microbrewers were forced by another bill from 2013 to give away their territorial distribution rights instead of being allowed to sell them. Again – crazy, right? A lawsuit was filed last December to overturn that law. I don’t know where that stands now, but there’s apparently no legislative fix for it. So, while this has been a lot more low-key this session, there’s still a lot to be done to make the beer market in Texas what it should be.

Good times for the craft brewers

There’s a lot more growth to come for the craft brewing industry.

beer

Texas’ smaller craft breweries increased production last year by nearly half and made deeper gains in the overall beer market, suggesting the industry’s growth spurt will continue.

“Yes, this is a long-term trend,” said Charles Vallhonrat, executive director of the Texas Craft Brewers Guild. “Do I think we’re approaching a saturation point? No.”

The guild on Tuesday is releasing figures showing Texas craft breweries made 833,191 barrels of beer in 2013, an increase of 17.6 percent. When the Spoetzel Brewery in Shiner, maker of Shiner Bock and other widely distributed beers, is excluded from the list, the remaining crafts saw their production mushroom by 44.3 percent, to a combined 265,958 barrels.

Biggest among this group of 98 breweries is Houston’s Saint Arnold Brewing Co., which expects to brew at least 65,000 barrels as it commemorates its 20th anniversary this year.

A barrel of beer would fill 55 six-packs of 12-ounce cans or bottles.

“That’s what people think of beer now,” Saint Arnold founder Brock Wagner said of the public’s evolving attitude. “It’s not just mass-produced light lager.”

[…]

As a percentage of the total beer market, the craft numbers seem tiny. Last year, the 98 smaller crafts that reported to the Brewers Association trade group produced 1.36 percent of the beer sold in Texas.

But that is up from 0.93 percent a year earlier. Vallhonrat said the rapid increase proves demand is growing, while the small market share indicates there is plenty of room for growth. Even including the much larger Spoetzel brewery, Texas craft beer accounted for less than 5 percent of the beer consumed in Texas.

“Texas is just a really big, big beer market,” he said. “There’s tremendous opportunity for growth in Texas.”

The Brewers Association reports that U.S. craft production rose 18 percent last year, to 15.6 million barrels. The Texas guild notes that means Texas produced 5.3 percent of the total.

The guild hopes to mirror the Brewers Association’s goal of doubling U.S. market share by 2020. On a national level, bolstered by record numbers of new breweries and the emergence of several very large players in the craft segment, that would mean increasing market share to 20 percent by that year.

“As the BA doubles, we’d expect this number (in Texas) to double as well,” Vallhonrat said.

The fact that the craft brewers’ overall share of the market is still in the one percent range shows the potential for more growth. There are still tons of beer drinkers out there that haven’t really given the non-major alternatives a try. I don’t know what the saturation point is, but I feel confident as well that it’s a fair bit higher than this.

The big dog of craft brewers in Houston, Saint Arnold, is celebrating its 20th anniversary this month, and they get a feature story on their history and outlook to help celebrate it.

As Wagner likes to joke, in 1994 he had a great idea for a business in 2006. Except for a hard-core group of enthusiasts, many of them homebrewers, most of them male, college-educated and in their 30s or 40s, consumers were initially reluctant to part with their light, familiar beers in large numbers.

“It took 20 years to teach everybody who had forgotten what beer was like,” Wagner said.

In 1996, Wagner and original business partner Kevin Bartol, both former investment bankers, predicted in the Houston Chronicle that they would be making 100,000 barrels within a decade. In reality, sales flattened at just over the 5,000-barrel mark for the next few years.

Twelve years later, production exceeded 20,000 barrels for the first time.

Wagner stuck it out, buying out Bartol, repurchasing shares from initial investors and building Saint Arnold into an iconic local brand through its Saturday tours, pub crawls and an array of community fundraising projects. His and Bartol’s goal from the beginning, he says, was to make the best beer possible and to build a company that Houston and the state of Texas would be proud of.

By late 2009, business was booming and Saint Arnold was constrained only by physical space. That’s when Wagner moved his brewery into a renovated warehouse overlooking downtown, even though it would’ve been cheaper to buy a custom-built building outside the city center. But again, he said he wanted to create a community gathering point. Again, his decision paid off.

Wagner took on investors to raise enough capital to convert the century-old warehouse into a modern brewing facility with a huge beer hall that serves lunch daily, packs in crowds during tours and special events and is rented out for private parties. The brewery attracts an estimated 100,000 visitors annually.

The new digs also significantly increased capacity. Production is expected in the range of 65,000 to 70,000 barrels this year, boosted not only by consumer demand but also by changes in state law last year that Wagner had pushed for over several legislative sessions. Those production numbers are expected to continue to grow.

Read the whole thing, it’s a nice story about a great local business. I don’t remember exactly when I first discovered Saint Arnold beers, but it was back when their Saturday tours were free and a lot smaller than they are now. I never liked the taste of the big mass-produced beers, and after coming to Houston and becoming acquainted with Shiner while I was at Rice, I never looked back. I’ve been delighted by the success of the small brewers, and as you know I was extremely pleased by the long-awaited passage last year of legislation to help free up their operations. There’s still work to be done in that regard – one item on their wish list is being able to sell bottled beer to customers on their premises – but we’re making progress. This KUHF story on Saint Arnold’s 20th anniversary sums it up in a pithy little way:

A 2012 study prepared by the Texas Craft Brewers Guild puts the industry’s economic impact on the state at more than $600 million per year. The trade group says that’s likely to increase nearly tenfold by 2020. That’s thanks in part to reforms passed by the Texas legislature last year, loosening the state’s restrictions on marketing and distribution for small brewers.

Scott Metzger, founder of San Antonio-based Freetail Brewing, recently addressed the House Economic & Small Business Development Committee on behalf of the Brewers Guild. He says more reforms are needed to help Texas brewers to compete with those in other states.

“Just to make it clear, if the breweries of Texas were regulated by the laws of California, we would be worth more,” Metzger testified.

Take that, Rick Perry.

Craft beer bills pass out of the Senate

A good day indeed.

The Texas Senate voted Monday to give craft brewers and brewpubs new opportunities to sell their beer.

“To see that happen was amazing,” said Scott Metzger, a San Antonio brewpub owner who worked with other brewers, legislators and wholesalers in negotiating a compromise.

Brock Wagner, owner of Houston’s Saint Arnold Brewing, called it a critical step toward passage of the state’s most significant beer-related legislation in 20 years.

“We still have a path to follow,” he said.

Metzger watched via his office computer at Freetail Brewing as the Senate voted 31-0 to approve two bills promoted by the Texas Craft Brewers Guild. An economic impact study Metzger prepared for the guild predicts the measures will spark even stronger growth for the state’s burgeoning craft beer industry.

[…]

Rick Donley, president of the Beer Alliance of Texas distributors group, which supported SB 515 and 518 from the beginning, called it “a good day for the craft-brewing industry,” including manufacturers and wholesalers.

As Metzger noted, SBs 516 and 517 were not taken up because the Senate can only vote on so many bills on a single day at this point in the session. They were subsequently passed unanimously on Wednesday. SB639, the Carona bill, was also approved after some modifications were made that settled most of the objections to it. All bills now await hearings in the House, and signs look good for passage. Put some beer in the fridge in anticipation of it finally happening.

Craft beer legislation advances

Moving forward.

Legislation authorizing the most significant changes in 20 years to the way beer is bought and sold in Texas passed a key Senate committee Tuesday with broad support.

Under terms of the bills, Houston’s Saint Arnold and other Texas craft breweries could sell a limited amount of beer on site and brewpubs like San Antonio’s Freetail Brewing could package some of their product for sale in stores, bars and restaurants.

The breweries, meanwhile, would be prohibited from accepting cash payments for the rights to distribute their beer in specific geographic regions, but they would be allowed to continue to share marketing and some other costs with their distributors.

“It’s an exciting day,” said Scott Metzger, the owner of Freetail Brewing, who has been negotiating on behalf of the Texas Craft Brewers Guild. “ … We have a path ahead of us.”

Final terms of the bills – four of which were developed after yearlong negotiations between brewers, lawmakers and distributor and consumer groups – were hammered out under a tight deadline set last week by the chairman of the Senate Committee on Business & Commerce, who introduced a competing bill and ordered the two sides to reach a compromise.

The committee approved all five amended bills unanimously Tuesday and sent them to the local calendar committee for expedited scheduling before the full Senate. Metzger said a signed agreement among stakeholders with an interest in the bills should expedite companion bills in the House.

Metzger and Brock Wagner of the Saint Arnold brewery both expressed positive thoughts on this, while spokespeople for the Beer Alliance of Texas and the Wholesale Beer Distributors of Texas, who had played the role of villain prior to this, both basically said everyone got some of what they wanted and no one got everything. In its summary of the legislation, Open The Taps says that “at least a few craft brewers are not pleased with the limitation on selling their brand territorial distribution rights”, which is an aspect of the Carona bill that had been criticized by everyone except the Wholesale Beer Distributors. My feelings on this are in line with Open the Taps, which writes in its analysis of the bills:

This is by no means a perfect package of regulatory changes, but again it is a good step. Things happen incrementally in legislative bodies, and we will be back next session if necessary to continue the fight to OPEN THE TAPS in Texas.

We still have a few points on our wish list to accomplish, and we are looking for ways to implement those points, but this may be the most we can get at this time and we will consider it more progress than has been made since 1993 when brew pubs were first allowed in Texas, post-prohibition.

See also Scott Metzger’s analysis of the bills and the process that led to the package that emerged from committee. This is tangible progress and a big deal in its own right, but hardly the end of the line. Now let’s get this across the finish line, and we can see where to go next from there. Good job, y’all.

What the microbreweries want from the next legislative session

Scott Metzger of Freetail Brewing has an update on what he and his craft-brewing colleagues have been working on.

Brock Wagner (of Saint Arnold of course) and I have been Co-Chairing the Texas Craft Brewers Guild Legislative Committee and have come a long way. There is still a ton of work to do, and nothing is certain, but I feel better about our chances than ever before. For the first time this issue is being tackled from the perspective of economic development and helping Texas-born businesses flourish. From that angle, there is really no denying that changes must be made to grant Texas craft brewers greater access to market.

The Texas Craft Brewers Guild has released this position paper laying out our legislative agenda. Specifically, we have four goals (all equal in importance):

  • Gain the ability for packaging breweries to sell their products to consumers on the premise of their breweries
  • Gain the ability for brewpubs to sell to the wholesale tier
  • Protect small brewer’s existing rights to self-distribute
  • Achieve these goals while protecting the integrity and viability of the 3-tier system

As I wrote here last November, protecting a viable, independent 3-tier system is vital for the health of the craft brewing industry. Without independent wholesalers, craft beer would never see the light of the shelves or taps we’d be stuck in a world without the wide variety of choices we enjoy today.

See here for more about their economic impact study. I’m less sanguine about the three-tier system than they are, but if they’ve found a way to overcome the resistance to any change while living within that system and not making it any harder for further newcomers to the industry, then who am I to complain? I wish them all the best of luck next year.

Beer is a job creator

Microbreweries are, anyway.

Craft brewing in Texas could add 52,000 jobs and mushroom into a $5.6 billion industry by 2020 if state lawmakers next year ease restrictions on breweries and restaurants that make beer on-site, a study prepared by the brewers claims.

That compares with the estimated $608 million economic impact that smaller, independently owned craft breweries made in 2011, according to the analysis made public Monday by the Texas Craft Brewers Guild.

“If you get a really vibrant industry going, with all the multiplier effects, to me it’s not unrealistic,” Brock Wagner, who founded Houston’s Saint Arnold Brewing Co. in 1994, said of the projected growth.

Wagner and other Brewers Guild members have already begun meeting with legislators and wholesaler groups ahead of the 2013 legislative session.

They are pushing for changes to the state alcohol code that would allow shipping breweries like Saint Arnold – which sell their product to wholesalers, who distribute it in turn to stores, bars and restaurants – to offer a limited amount of beer directly to consumers and allow brewpubs to package some of their beer for off-site retail sales they way they do in states with strong brewing industries.

Wagner said the changes would encourage more Texans to open breweries and help startups and established breweries alike by providing additional revenue that can be used to expand marketing efforts and reach new beer drinkers.

“Changing the laws will make many of these businesses much more viable,” he added. “If the law changes, we will change our staffing overnight – literally, add another 50 percent.”

We are well familiar with the microbrewers’ efforts to get the Lege to update its archaic and obsolete laws regarding beer distribution. I of course hope that the fourth time is the charm. I don’t recall them making an explicit economic argument for their case in years past; certainly, they appealed to basic free market principles, which the beer distribution duopoly most certainly is not, but I don’t recall jobs being part of the pitch. Of course, they didn’t have these numbers before now. Here’s more on that.

The Texas craft beer industry is having measurable positive economic impact on local and regional economies throughout the state to the tune of $608 million, according to the Economic Impact of the Texas Craft Brewing Industry study released today by the Texas Craft Brewers Guild. Texas craft brewers are also creating jobs, accounting for 51.2 percent of all the state’s brewery jobs, a remarkable figure given only 0.7% of the beer consumed in the state comes from Texas craft brewers.

The study, authored by University of Texas-San Antonio Economics Professor Scott Metzger, founder and CEO of San Antonio-based Freetail Brewing Co., also models how the economic impact of the Texas craft beer industry could reach $5.6 billion annually in just eight years.

“$5.6 billion sounds astounding, but given what’s happening across the country with craft beer, it’s not. It’s actually conservative,” Metzger says, calling the 2011 figure “the tip of the iceberg.”


“Given consumer demand and planned increases in capacity, a tremendous opportunity exists for ongoing and future growth — provided legislation may be passed allowing Texas’ craft brewers the same access to market enjoyed by brewers in other states and by the Texas wine industry,” Metzger says.

 

“In other states, brewers can sell their packaged goods directly to consumers through tasting rooms. In other states, brewpubs can sell their beer off premises, at festivals, for instance, and as packaged goods in retail stores, not just at their brewpub location,” explains Metzger.

 

“These sales opportunities other brewers benefit and grow from are lost for Texas craft brewers — and they add up.”

Download the entire report, official press release and supplemental materials here.

I have not had the chance to pore through these reports in detail yet. I suspect there may be a bit of puffery in there, as is often the case with studies like these, but the thing about a small population is that it doesn’t take much for it to have rapid and sizable growth. Further, the vast majority of microbreweries are startups, and as the CBPP points out, that’s where the job creation action is.

There is an emerging consensus among economists that young small firms — not small firms in general — are particularly important “job creators.” A 2010 study finds no systematic relationship between firm size and job growth, after controlling for firms’ age.[22] It thus is important to distinguish between startup businesses, which the study finds “contribute substantially to both gross and net job creation” (as well as to gross job destruction when they fail, as many startups do), and other small businesses, which on average generate no more net job growth than do larger businesses.[23]

Similarly, as CRS notes, recent research “suggests that small businesses contribute only slightly more jobs than other firms relative to their employment share. Moreover, this differential is not due to hiring by existing small firms, but rather to startups, which tend to be small.”[24]

So there you have it. Do your part for job creation in Texas and pick up a sixpack or two of your favorite microbrew. It’s the right thing to do.

RIP, HB602

Dammit.

Texans won’t be buying liquor on Sunday and the state’s 29 brewpubs won’t be competing with their out-of-state rivals on local grocery shelves.

And Texas breweries or liquor distillers still can’t sell a 12-pack of beer or a souvenir bottle of bourbon to tourists, as the Legislature has killed all bills related to changes in state laws on beer and liquor retailing.

“We got railroaded,” said Dan Garrison with Garrison Brothers Distillery, a Hill Country distiller who wanted the ability to sell a souvenir bottle of his bourbon to tour groups.

Garrison’s comment could sum up the frustration of the smallest players in the state’s beer and liquor industry that is controlled by giants.

Rep. Mike Hamilton, R-Mauriceville, chairs the House Committee on Licensing and Administrative Procedures, where most of the alcohol-related bills died this session.

He said it’s difficult to change decades-old laws without affecting someone’s financial interest.

Translation: It’s difficult to give small brewers and distillers an even break because doing so might put a tiny dent in the massive, oligarchic profits of the big distributors.

Most attempts to change beer or liquor laws eventually bump up against the state’s post-Prohibition rules that maintain distinct boundaries between manufacturers, distributors and retailers, in what is commonly called the three-tiered system.

House Bill 660 would have allowed brewpub owners to sell their beer through distributors at retail outlets. The brewpubs said they would expand and create jobs.

The Beer Alliance of Texas and the Licensed Beverage Distributors supported the bill, while the rival Wholesale Beer Distributors of Texas opposed it. That was enough to kill it in Hamilton’s committee.

Likewise, Rep. Jessica Farrar’s House Bill 602, which would have allowed microbreweries to sell 12-packs of beer to tour groups, fell victim to competition between two distributor groups.

And once again, the deciding factor in this debate is what’s good for the distributors, and not for the customers. The customers always lose. On the one hand, legislation to allow microbreweries to sell their product onsite made it farther than it had before, and given the way the Lege works you have to hope that this represents progress. On the other hand, to come this far and see it fall just short is that much more wrenching because you could see the finish line. I’m sure I’ll feel hopeful again in time for the next session, but for now I’m just pissed off. Lee Nichols has more.

UPDATE: Here’s the Chron story.

Saint Arnold Brewing Co. founder Brock Wagner, one of the driving forces behind this and two previous legislative efforts, said he was “annoyed” at the continued failure to pass a bill that had no other organized opposition.

“We just got outgunned,” he said.

“The laws in Texas need to be changed,” he said. “Right now, the laws in Texas are biased against in-state craft breweries. It makes no sense.”

I couldn’t agree more.

HB602 clears Senate committee

One more step forward for microbreweries and their ability to let customers bring their product home after a tour, as HB602 gets voted out of the Senate Business & Commerce Committee.

HB 602 is a compromise – it still bans true retail sales, but would allow small breweries to give away up to 144 ounces of their product to a brewery visitor at the end of a paid-admission brewery tour.

Language was added limiting the privilege to only breweries producing less than 75,000 barrels per year in order to get WBDT on board, but last Wednesday, Anheuser-Busch objected to that amendment, saying it unfairly discriminated against big breweries. And as one of the world’s largest breweries, including a facility in Houston, you can guess what kind of clout A-B carries. The bill, which had already passed the House, was pulled down by its Senate sponsor for further discussion.

The bill, including the production cap, has now been recommended for the “Local & Uncontested” calendar in the Senate.

“I thought the bill was dead,” said Brock Wagner of Houston’s Saint Arnold Brewing, one of the leading proponents of HB 602. “I’m cautiously optimistic. I hope it continues moving forward with no baggage to weigh it down.”

See here for the earlier drama. Here’s the text of the bill as it passed out of committee. This is definitely encouraging, but we’re very late in the session, and the differences between the House and Senate versions of the bills, with the differing lobbyist perspectives, means there will be no guarantees. If someone wants this dead enough, it can be killed. Keep your fingers crossed, and keep calling your legislators to let them know you want to see this bill passed. Via I Love Beer.

A win for the microbrewers

Woo hoo!

Craft beer brewers came to the Capitol this session with a number of bills giving them greater latitude in getting their beers to customers. [Thursday], the House gave an early OK to one of those bills, allowing breweries to charge admission for tours, and include up to two six-packs of beers to give to tourists at the end.

“Tours of our brewery are the single most important marketing item,” Brock Wagner, founder of Saint Arnold brewery in Houston, told the House committee that took up the bill last month. Other states have that ability, he said, and those breweries and their beers are out-competing Texas beers.

This is HB602 by Rep. Jessica Farrar we’re talking about. It passed the House unanimously and now needs to pass the Senate. Beer, TX has some information on that:

[Rep. Farrar’s] bill now awaits committee assignment in the Senate, where it is being sponsored by State Sen. Wendy Davis, D-Fort Worth.

[…]

Brock Wagner, the Saint Arnold Brewing Co. founder who has pushed for the change as a way to help small brewers market their products more effectively, said his focus now turns to the upper chamber. While pleased with Thursday’s vote, he was not ready to pop the top on a celebratory ale.

“I continue my state of cautious optimism,” he said. “We’re not there yet. It’s certainly a big step in the right direction.”

Sen. Davis’ bill is SB1863; it remains in the Business and Commerce Committee as of today. I should note that Saint Arnold’s already charges for a tour, and in return you get the lovely glass pictured on that page. That’s nice, but perhaps not so useful after a certain number of return trips. If this gets signed by the Governor, I presume Saint Arnold will institute a tiered pricing structure for its tours, thus allowing those who wish to take home a six pack or two to do so. After three sessions of trying to make something like this happen, this is substantial progress.

I wish I could report equally good news for the brewpub bill HB660, but it remains in committee and I daresay it is unlikely to see the light of day this session. Tellingly, the only update on the Brewed And Never Battered blog talks about a couple of other bills that had recent committee hearings, HB2436 by Rep. Eddie Rodriguez, and companion bill SB1575 by Sen. Kirk Watson, which would allow for some direct sales by microbrewers, but neither has received a committee vote yet. Frankly, no matter what happens with any of these bills, I think Scott Metzger did a great job getting the word out and building support for letting brewpubs expand their markets. If HB602 can pass, something like HB660 will eventually pass, too. It may take a few more sessions, but it will happen, and we’ll all be the better off for it.

Brewery bills get referred to committee

It’s a first step.

State Rep. Jessica Farrar, D-Houston, has introduced House Bill 602, which would allow breweries to distribute up to 48 12-ounce beers at the conclusion of tours of the respective facilities. Brewers would cover the cost of the beer by charging varying tour admission fees. The net effect would be that tourists could take some of the product home with them, just as visitors to Texas wineries can do under existing law.

HB 602 is very similar to a bill Farrar carried during the 2009 session that made it out of committee but was buried in Calendars. Traditionally, the Texas beer wholesalers have opposed anything seen as challenging the three-tier system that gives distributors exclusive rights to sell beer to retail outlets.

This is the third time a version of the bill has been introduced. But since the defeat of the 2009 measure, Texas has seen a significant spike in the number of small breweries that have either opened, have licenses to open or are in more preliminary stages.

[…]

Also sent to the Licensing & Administrative Procedures Committee is House Bill 660, sponsored by state Rep. Mike Villarreal, D-San Antonio. It would allow brewpubs – that is, restaurants that make and sell beer on premises only – to increase the amount of beer they produce and to sell some of that beer off-site through distributors.

It’s a journey of a thousand miles, and there’s a million ways to go off the trail and into the weeds, but you have to start somewhere. As always, if you support these bills, now would be a good time to let your Rep and your Senator know that. The AusChron has more.

Legislative beer news

There’s a new player on the beer legislation scene this session.

The owner of one of San Antonio’s largest brewpubs, Freetail Brewing Co., is spearheading an effort to change state law to allow it and other brewpubs to distribute their beer anywhere in Texas.

If successful, beer aficionados no longer would need to travel to San Antonio to sip on Blue Star beverages, or to Austin for Uncle Billy’s or Dallas for Gordon Biersch. The brewpubs would be able to self-distribute up to 10,000 barrels of their brew per year or sell it to licensed distributors.

And under the proposed legislation, brewpubs could increase their total production from the existing limit of 5,000 barrels per year to 75,000 barrels.

Freetail owner Scott Metzger helped draft House Bill 660, which would change the state’s beer distribution laws. State Rep. Mike Villarreal, D-San Antonio, filed the bill last week.

The San Antonio Current, the Chron’s Beer, TX blog, and the Austin Chronicle have all written about HB 660. Far as I know, this is the first time that brewpubs have gotten involved in this.

If you’ve read this blog for any length of time, you know that I’m a fan of Saint Arnold beer and of microbreweries in general, and I’ve been a supporter of legislation to give them more freedom to sell their product. Past legislative efforts to allow microbreweries to sell their wares at their base of operations, which is something that Texas wineries have been able to do for some years now, have fallen short. The microbreweries are trying again, but theirs is a separate effort, as noted in that Beer, TX post:

Our own Jessica Farrar, D-Houston, has indeed introduced a bill that would let brewers distribute a limited amount of beer directly to consumers. HB 602 would allow Texas breweries to charge for tours and then give tour participants up to 48 12-ounce beers at the conclusion.

By charging varying amounts, depending on how much beer a tourist wanted to receive, consumers could get the beer they want while maintaining the status quo for the state’s powerful distributors. According to the wording of Farrar’s bill:

This section does not authorize the holder of a brewer’s permit to sell ale to an ultimate consumer.

So instead of allowing people to buy a case of beer after touring the brewery, you can offer differently-priced tours that may or may not include a free case or two of the product to take home with you afterward. If you’re thinking that’s a subtle change from the previous bills, you’re correct. If you’re wondering why such a subtle change would make this bill more likely to pass, all I can say is welcome to the world of sausage-making.

Anyway. Freetail owner Scott Metzger has started a blog to document his journey through this process, and he describes the differences between HBs 660 and 602 in this post, summing up as follows:

Obviously, I support HB 660. I also believe that the activities that would be permitted by HB 602 should be legal. If a brewery wants to give you a couple of cases of beer, I believe they should be allowed to. It should be noted, however, that HB 602 has a very narrow focus that affects only a handful of breweries: A-B in Houston, MillerCoors in Ft. Worth, Spoetzel in Shiner, St. Arnold in Houston, Real Ale in Blanco, Rahr in Ft. Worth, and Independence in Austin (in other words, only the breweries that package beer in 12-ounce bottles).

I support this bill and the efforts of the breweries who would be helped by its passage. I would however, point to HB 660 as a more comprehensive piece of reform legislation that has a greater reach. And with the exception of A-B, MillerCoors and Shiner who all exceed HB 660′s size restriction, the Brewpub bill allows the activities that HB 602 seeks to allow, should a brewery decide to change to a brewpub license. A brewpub is legally allowed to sell you packaged product for off-premise consumption, so long as they have packaged product to sell (most don’t).

You will never find me campaigning against HB 602, as I think it’s a bill that should pass. However, I believe our state is in need of greater reform that benefits our craft beer industry.

I was curious about what the microbrewery perspective was on HB 660, so I placed a call to Saint Arnold’s and had a chat with Brock Wagner. He told me they’re focused on their own efforts and that he wishes Metzger and his supporters the best of luck. As do I, to all of them. There’s a Facebook page for HB 660 to like if you’re into that sort of thing. You know I’ll be keeping an eye on this.

Good beer, good times

Nice to know that quality still matters.

Saint Arnold Brewing Co. increased production by 22  percent last year, continuing a streak of double-digit annual growth even as the U.S. beer industry stagnated.

The Houston brewery, founded in 1994, expanded capacity by about 80 percent in 2010 with a move into a larger plant and the purchase of seven new fermentation tanks. Despite startup hitches that led to the dumping of several batches and retail shortages, Saint Arnold produced a company-record 31,445 barrels of beer.

Once the hiccups were solved, shipments soared 38  percent during the second half of the year, said founder Brock Wagner.

In the fall, Saint Arnold began distributing in Louisiana, the company’s first foray outside of Texas. That expansion, remaining capacity for an additional 16,000 barrels and sustained interest in locally made craft beer have the brewery poised for continued growth.

“I don’t see anything slowing it down,” Wagner said.

That includes the recent openings, and planned openings, of several craft breweries in Texas. Rather, Wagner said, established breweries should benefit from any increased market interest.

This makes me happy. The Saint Arnold brewery is one of the best things about Houston. Keep up the great work, y’all.

Time for a Saint Arnold update

Things are going well on the new brewery construction front.

Saint Arnold Brewing Co. is leaving its 30,000-square-foot, leased facility at 2522 Fairway Park Drive in the Heights and moving to a three-story, 90,000-square-foot brick building at 2000 Lyons Ave., just north of Interstate 10 and east of Elysian Street.

The facility was previously owned by the Houston Independent School District.

Owner Brock Wagner, a West University Place resident, hopes to make the move by June.

Wagner said business has grown by about 25 percent each year.

“I knew the current facility was going to reach its production limit in the not too distant future,” Wagner said.

[…]

Dedicated to urban revitalization, Wagner felt the best place was downtown, but most buildings were in terrible shape or owners wanted “ridiculous amounts of money” for them, he said.

“When we opened, we had two goals: to brew and sell the best beer in Texas and to create an institution Houston was proud of,” he said. “As part of that it seemed to make sense that we were centrally located.”

He found the building at 2000 Lyons Ave., which HISD used as a frozen food distribution warehouse. Initially, the district planned to demolish the building, built in 1914, because most businesses couldn’t use the building with larger freezer space, Wagner said.

From an operational standpoint, the building wasn’t perfect for the brewery either. But Wagner said he hated to see an old building with so much character abandoned.

He purchased the building and land plus a 79-space adjacent parking lot for $1.18 million.

Wagner is spending $6 million to prepare the building for the brewery, including adding 12,000 square feet.

There will be more bathrooms, air conditioning, and weekday tours. It doesn’t get much better than that.

The odd thing about this story is that statement that the existing brewery is in the Heights. I had no idea that the Heights extended outside Loop 610, and I’ve never heard this location being described as being part of The Heights before. But hey, this was in the Heights/Neartown version of the Chron’s “This Week” section, so it had to be connected somehow. Whatever.

In any event, you can see a recent picture of the construction here. That comes from the Saint Arnold Twitter feed. If you’re already on Twitter, you surely already follow Saint Arnold there; if you’re not, perhaps this will serve as a reason to join up. They really know how to use social networking software over there. More on the brewery move here and here.