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Texas Craft Brewers Guild

Microbreweries organize again

About time.

Craft brewers are asking beer fans to put their money where their thirst is.

Six weeks before state primary elections, the Texas Craft Brewers Guild on Monday launched a political action committee to raise money and awareness to challenge “archaic, anti-competitive beer laws” it says are holding back an industry poised for dramatic growth.

The PAC already has raised more than $40,000 from among its approximately 250 brewery members, with the largest individual donations coming from the owners of Austin Beerworks and Saint Arnold, Live Oak and Deep Ellum Brewing Cos. Much of the money raised by the new CraftPAC will go to support state legislative candidates who support the brewers’ agenda, guild executive director Charles Vallhonrat said

CraftPAC so far has donated $1,000 each to two incumbent legislators – one Democrat and one Republican – in the Austin area.

“We intend to influence where we can,” Vallhonrat said.

Here’s the CraftPAC finance report for January. The legislators in question are Reps. Eddie Rodriguez and Tony Dale, though I’m sure there will be more. It’s one thing to give money to a friendly incumbent in a friendly district, but it’s something else altogether to contribute to someone who’s looking to take out an enemy. We’ll see how seriously they decide to play.

Brewbound has more details:

Initially, CraftPAC will focus on legalizing of to-go sales from production brewery taprooms, which Texas law currently outlaws. Although the state’s manufacturing breweries are not allowed to sell beer for off-premise consumption, the state’s brewpubs, wineries and distilleries are allowed to sell their products to-go.

Speaking to Brewbound, Texas Craft Brewers Guild Executive Director Charles Vallhonrat said Texas distributors have had a financial edge over brewers after giving more than $18 million in political contributions to lawmakers. CraftPAC, he added, is a way to level the playing field.

“We want to be on the same field,” he said. “We know that they have big bats, but we need to be on the same field to say we’re in the game.”

CraftPAC board chairman and Austin Beerworks co-founder Adam DeBower added that Texas’ brewers haven’t had a voice in the legislature since 2013, when several lawmakers who supported brewers retired or moved on.

“We don’t have any champions left,” he said.

[…]

Vallhonrat said last year’s passage of House Bill 3287 — which put tighter restrictions on how beer that is sold for on-premise consumption at brewery taprooms — was the catalyst to the formation of CraftPAC.

“The blow we received from 3287 showed the overwhelming power that the distributors wield,” he said. “That they could influence a bill that absolutely no brewery supported, and they could go around saying this was for the protection of breweries and convince the Legislature and get it passed, that really demonstrated what we’re fighting against.”

In 3287, Texas lawmakers changed the way the state’s barrel cap is calculated, adding production across multiple brewing operations rather than from individual facilities. Now, breweries making more than 225,000 combined barrels annually will be required to repurchase their own product from a wholesaler in order to continue selling beer for on-premise consumption in their taprooms.

In the announcement of CraftPAC, the Guild also cited the 2013 passage of Senate Bill 639, which prohibits breweries from selling their distribution rights to wholesalers, and led to a lawsuit that will be decided by the Texas Supreme Court.

Vallhonrat told Brewbound that CraftPAC will also work to make other “common sense updates” to Texas’ alcohol code such as eliminating the distinction between “ale” and “beer.” According to the Texas code, an ale is a beer above five percent ABV while a beer is under five percent ABV. Such distinctions are costly, and add market confusion and work for brewery owners, he argued.

DeBower added that CraftPAC would work to equalize licensing differences between breweries and brewpubs. Currently, brewers are required to have a manufacturer’s license while brewpubs receive retail license and are afforded different privileges, such as off-premise sales.

If you’ve read this blog for any length of time, you know what I think of this state’s ridiculous, anachronistic, and extremely consumer-unfriendly beer laws. (If you’re new here, you can now probably guess.) I support all of this, of course, but I’m shaking my head a little because this is at least the third separate effort to organize and whip up public opinion in favor of modernizing the beer codes. There was a bipartisan blog-based effort in 2007, of which I was a part, and the now-dormant Open The Taps group that helped spearhead the 2013 laws that represented the one step forward we have taken. The experience since then shows that a movement can never take anything for granted – what has been done can be undone, or at least undermined. I wish CraftPAC all the success – their Facebook page is here; give it a Like – and I especially wish that they stay around and keep at it well after they do have success.

The year in beer

It was pretty good overall for Texas craft brewers, especially in Houston.

Texas craft brewers will close the books on 2017 having made more beer, opened more breweries and garnered more national recognition for the state than ever.

Looking ahead to 2018, Houston appears positioned to keep the party going. Commercial real estate services firm Cushman & Wakefield recently identified Harris County as second in the nation for number of breweries in planning.

Many of these newcomers are likely to be small, inviting people to walk or bicycle from nearby homes or workplaces. But at least two established local companies recently announced major expansions that should continue the trend of making breweries bona fide tourist destinations.

Such developments have craft industry leaders upbeat about the future, though they are still seething over a law change enacted last spring that they believe has hurt the value of breweries and penalizes those seeking to grow significantly.

The law now forces breweries that reach a certain size to sell and buy back their own beer before they can offer it in their taprooms, cutting into profit margins. Because the size restriction includes production totals of parent companies, brewers fear it could deter future acquisitions – not just by global giants but from other craft breweries as well.

Charles Vallhonrat, executive director of the Texas Craft Brewers Guild, this week called the measure “nonsensical” and pledged to continue efforts to “modernize” the alcoholic beverage code.

Regardless, for the most part and in spite of a historic flood that knocked much of the Texas Gulf Coast onto its heels, it was a year of rewards and resilience for local brewers.

The trend these days is for the breweries to focus on taproom sales aimed at neighborhood customers. I’ve had a hard time keeping up with all the new construction, but I know there are more options near where I live now, and more are coming. One of those expansions mentioned above will be pretty close to my home, more of a bike ride than a walk but exactly the sort of thing that would be appealing on a warm day. Saint Arnold is building a beer garden in the space next door to their facility, which ought to be awesome. Maybe one day we’ll get our Legislature to fix the idiot anti-consumer beer laws we have in this state, but until then it’s on us to support these vibrant job (and beer) creators.

The taproom bill is in effect

And it’s lousy, as expected.

The latest draft of beer legislation in Texas has left a bitter taste in the mouths of some craft brewers.

HB 3287, which lawmakers passed during their regular legislative session earlier this year, requires craft brewers that produce more than 225,000 barrels per year to pay a distributor to deliver their beer — even if the destination is inside their own facility.

Proponents of the legislation say it will maintain the state’s three-tier system — Prohibition-era regulations that legally separate brewers, distributors and retailers — and properly regulate large companies that purchase craft breweries. To opponents, though, the law targets newer craft breweries across the state, discouraging investment in their businesses while protecting larger and more established beer companies.

[…]

“When you get to a certain point, you’re no longer the little guy that needs the incentives,” said Rick Donley, president of the Beer Alliance of Texas, which represents distributors and supported the legislation. “Once they get to a certain annual production level, they’re really not new entrants into the marketplace.”

But [Charlie Vallhonrat, the executive director of the Texas Craft Brewers Guild] says craft brewers weren’t asking for any help from distributors, who he charges will benefit most from the new law. Carve-outs written into the law allow three craft breweries recently purchased by larger breweries to avoid the 225,000-barrel cap: Karbach in Houston, bought by Anheuser-Busch InBev; Revolver in Granbury, purchased by Miller-Coors; and Independence in Austin, bought by a Heineken-owned subsidiary.

“They claim that this is to protect the three-tier system,” Vallhonrat said. “This has nothing to do with protecting the three-tier system.”

See here for the background. As you know, I think the three-tier system should be ashcanned, but it remains the case that no one has asked me. I don’t know why it is that we can’t have a truly open, consumer-friendly market for beer in Texas, but clearly we can’t. The success that microbrewers have had in this state has been despite the existing regulatory environment, not abetted by it.

Weird taproom bill gets final passage

Bummer.

A bill that would force Texas breweries, once they’ve grown beyond a state-limited size, to sell and buy back their own beer before offering it in their own taprooms has now passed both houses of the state Legislature.

“To say that today’s outcome was incredibly disheartening would be to put it mildly,” the Texas Craft Brewers Guild said in a statement following a 19-to-10 vote in the Senate.

The House approved the measure May 6.

House Bill 3287 has been blasted as “anti-competitive,” “anti-beer” and a potential job killer by an unlikely coalition that includes Anheuser-Busch InBev and the state’s 200-plus craft brewers, which often find themselves at odds with the global giant. The Texas Association of Manufacturers and the conservative Texas Public Policy Foundation also opposed the measure.

The bill was supported by the state’s two distributor groups.

See here for the background. This all basically happened under the radar, when there was no organized grassroots efforts on behalf of the microbreweries. I suppose that says something about the power of the distributors’ lobbyists, but it’s also a reminder that what was won can be lost, and defense is at least as important a offense.

Weird taproom bill passes the House

I don’t understand this at all.

The Texas House on Saturday voted overwhelming to place new constraints on craft breweries that grow beyond a set size or become acquired by a larger beer company.

Supporters of House Bill 3287 also fought back efforts to amend the legislation to give craft brewers the right to sell some beer on site for consumers to take home – something the smaller brewers have tried to secure for years.

HB 3287, blasted as anti-competitive by critics, is opposed by the Texas Craft Brewers Guild and Anheuser-Busch InBev as well as pro-business groups and a conservative Texas think tank.

“Now we prepare for the Senate battle,” guild executive director Charles Vallhonrat said after the vote.

A 2013 package of laws gave breweries that produce less than 225,000 barrels of beer annually to sell up to 5,000 barrels directly to customers, who must drink the beer in the taproom before they leave.

As originally written, House Bill 3287 would have extended the prohibition against on-site sales to any brewery that is acquired by another company that collectively exceeds that limit.

That group includes Houston’s Karbach Brewing Co., acquired last fall by A-B InBev, which makes many of millions of barrels of Budweiser and other products across the globe.

A revision to the bill allows Karbach and the other larger breweries to continue to operate taprooms, but it would force them to sell their beer to a distributor and then buy it back for sale to the public.

The brewers say the bill would discourage investors and will hurt their ability to grow.

The only beneficiary, they say, are the distributors who already exert near-total control over how beer gets from producers to retailers.

Here’s an earlier version of this story from before the House vote and here for a story from two weeks ago when this was in committee. I can only presume the distributors were behind this bill, which should tell you all you need to know. I guess this should remind us all that despite the 2013 bill that allowed on-premises beer sales at microbreweries, the big beer distributors can still throw their weight around when they want to.

The craft brewers’ legislative agenda

Same as it was last time.

Now that the 85th Texas Legislature is in session, lobbyists for the Texas Craft Brewers Guild, the organization that advances the interests of the state’s craft brewers, are going to push for more. Namely, they want production breweries to be able to sell beer to-go from their taprooms.

“Having off-premise sales in breweries is our No. 1 priority,” Charles Vallhonrat, the director of the guild, said.

The Texas Craft Brewers Guild had hoped to make that bill law in 2015, but that didn’t happen. As a result, the Dallas-based Deep Ellum Brewing sued the state in fall 2015 — a lawsuit that has yet to be resolved.

Currently, Texas law permits brewpubs, but not production breweries, to sell beer in bottles, cans and growlers to-go from their facility. Brewpubs can also offer beers from other breweries on-site, but they are limited in the amount of beer they can produce each year: no more than 10,000 barrels.

The inability to make off-premise sales is something brewery owners believe is unfair, and as a result, some breweries have made the switch to a brewpub license, including Austin’s own Jester King in 2013, Adelbert’s last year and, now, Blue Owl Brewing, which recently started offering cans and growlers to-go.)

[…]

“We’ve been speaking with the distributor lobbies,” Vallhonrat said. “There’s certainly opposition to it, but we’re working through it. We’re also closely watching the Deep Ellum lawsuit. But we will bring a bill about off-premise sales to the Legislature.”

Distributors, he said, are opposed to the idea because allowing consumers to buy beer to take home directly from the breweries could, theoretically, take away some of their business. That’s not how the guild sees it, however.

“We don’t see it as an alternative to retail sales,” Vallhonrat said. “People aren’t going to start buying their beer at the brewery all the time. They’ll go for special occasions, when there’s a big release or they have friends in town. Off-premise sales can drive beer tourism. It’s a great way to promote Texas beer.”

See here for some background, and here for more on the Deep Ellum lawsuit. Microbreweries won the right to sell their beer to visitors in 2013, but only for on-premises consumption. It’s still not legal to pick up a six pack to go after taking a tour at whatever microbrewery you happen to be visiting. They tried again in 2015 but got nowhere, and much as it pains me to say I’d bet against them this time as well. The argument that allowing this would negatively affect the distributors in any meaningful way is ludicrous – who would ever choose to drive to a microbrewery to buy a case as opposed to picking one up at a retail location? It makes no sense, but that’s what they’re going with, and it’s always easier on issues like this to play defense, since running out the clock is all you need to do. I don’t know if any specific bills have been filed for this yet, so check with the Craft Brewers Guild for further information and any action items to take up.

More on this session’s beer bills

A story from the DMN about the state of microbreweries and beer-related legislation in Texas.

TexasCraftBrewersGuild

Brewers say they rely on word of mouth among diehard enthusiasts, so they want drinkers — particularly those from out of state — to introduce their beers to friends, neighbors and other connoisseurs. A measure offered by Sen. Kevin Eltife, R-Tyler, would let brewery visitors purchase beer on site to take home with them.

The financial gains from such sales would be minimal. But the ripple effects from word-of-mouth promotions could be big and even promote tourism in the state, said Michael Peticolas, owner of Peticolas Brewing Co. in Dallas who helps keep tabs on legislative issues for the brewers guild.

“Breweries get a huge number of tourists coming in,” Peticolas said. “So often they try something that they like and want to take a stout or a six-pack home for them or their friends. Right now, we can’t sell to them, but Texas wineries and distilleries already get to do this.”

Another bill would make further inroads in self-distribution by allowing brewers to store ale in a different county, expanding a provision that already applies to other beer styles.

Currently, if Peticolas wants to reach out to retailers in Austin or San Antonio to sell his Velvet Hammer Imperial Red Ale, a driver would have to return unsold products to Dallas that same day.

Read that last sentence and remind yourself of it the next time you hear someone go on about how much we love free markets here in Texas. While craft brewers are working to build on the gains they made in 2013, there are also efforts to restrict things further.

Peticolas, along with Granbury’s Revolver Brewing, is among a handful of brewers suing the state to have more control over distribution.

In 2013, the Legislature prohibited brewers from selling distribution rights. Before, distributors would pay brewers for the right to sell their beer in certain markets. Craft brewers say they would then use that money to reinvest in their brew.

But now, they must give those rights to distributors for free, although the distributors can sell the rights for profit.

Legislation offered by Sen. Senfronia Thompson, D-Houston, would slash distribution rights further. Her bill would reduce the number of barrels that microbrewers could self-distribute from 40,000 to 5,000. Each barrel is the equivalent of about two standard kegs.

Rick Donley, president of the Beer Alliance of Texas, said his group helped bring craft brewers and others together to compromise on legisation two years ago. So industry representatives were surprised when craft brewers sought legislation such as Eltife’s bill this year, he said.

“They made no attempt to engage those same stakeholders,” Donley said. “So there is a natural reluctance to not support it, especially when we don’t see the benefit for us. The legislative process is the spirit of compromise, and we certainly feel some of these bills violate the spirit of that agreement.”

Donley said craft brewers are thriving in the current system.

“They already have every tool they need now to have access to the market,” he said.

Brewers believe Thompson’s bill “would be a huge blow for us,” said Steve Porcari, a co-founder of Four Corners Brewing in Oak Cliff. “The day it was filed, one of my drivers asked what it meant, and I said it meant he’s out of a job if it passes.”

[…]

In a written statement, Thompson said her bill is meant get brewers back into the long-standing system of checks and balances.

The 2013 agreement “was intended to give craft brewers access to the market and move them to the traditional three-tier system as quickly as possible,” Thompson said. “There is a movement afoot to break the agreement, and I trust all sides will make good on their promise.”

[Charles] Vallhonrat, of the [Texas Craft Brewers Guild], acknowledges that craft brewers worked with distributors and others two years ago, but he disputed that the agreement included a cut in self-distribution rights.

Distributors, he argued, could be hurt by the new plan, too. They might have to take bigger risks on new brews before they’ve proved popular.

“I don’t know what it is we’re not honoring,” Vallhonrat said. “Business is growing, and we want to help it grow on both sides, for brewers and distributors.”

See here for more on that lawsuit. I don’t know where things are going to go from here in this session, but it seems clear that the brief period of consensus that we had in 2013 has passed. Also unlike 2013 and sessions before that, I’m not aware of any organizing efforts by the craft brewers. They have the Guild and I’m sure there’s a lobbyist or two on the ground for them, but there’s been little to nothing to engage the public as there has been in the past. I hope that doesn’t work against them this time.

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.

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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.

The microbreweries aren’t done with the Legislature

Microbreweries took a big step forward in 2013, but there’s still more to be done.

The 2013 legislative session, which featured the largest overhaul of the beer industry since 1993, was viewed by many observers as a watershed moment for craft brewers in Texas. But in testimony before the House Economic and Small Business Development Committee on Thursday, Scott Metzger, who sits on the board of the Texas Craft Brewers Guild, said the state can still do more for the industry.

At a hearing on how to make Texas more attractive to venture capital investment, Metzger predicted that over next 10 years, the brewing industry could be the most dynamic growth sector of the Texas economy. That potential is limited, he said, because of remaining restrictions on brewers that make it difficult to attract investors.

“The restrictions the state of Texas places on our businesses dictate that it often makes better economic sense to deploy capital in a different state,” Metzger, a former economics professor, told lawmakers.

[…]

Asserting that New York, Washington, Colorado and even California had more brewer-friendly environments than Texas, Metzger said Thursday that the industry is encumbered locally by “restrictive franchise statutes” and “a regulatory scheme that restricts our ability to sell and market our products and, in one particularly egregious instance, to realize any of the actual value of the brands that we have created.”

In addition to approving a slate of bills in 2013 that opened up the industry in ways his group appreciated, including allowing brewpubs to distribute their beer off-site via third-party distributors, Metzger said lawmakers also passed a bill that they were less enthusiastic about that prevented brewers from receiving compensation from wholesalers for their distribution rights. He also raised objections to rules that he said essentially lock in distribution agreements “for life.”

Metzger encouraged lawmakers to think of the three-tiered system as “a living, breathing thing that needs to evolve with the changing marketplace.”

I pointed this out last July, via a post from the Jester King brewery. Here’s a quote:

While the new laws represent major progress for Texas beer, there are some realities that we are not pleased with. There still exist exorbitant licensing fees in Texas that keep beer from small, artisan brewers out of our state. We still will not be seeing beer from Cantillon or Fantome on Texas store shelves anytime soon. We feel strongly that in order for Texas to become a truly world-class beer state, it must eliminate the massive licensing fees that keep out beer from small, artisan producers. We have written extensively on this topic before, which you can read here.

We are also not pleased with the passage of SB 639, which makes it expressly illegal for breweries to sell the right to distribute their products to wholesalers, while making it expressly legal for wholesalers to sell those same rights to one another. This law is tantamount to legalized theft, and we will join future efforts to see it overturned. For our complete commentary on SB 639, please follow this link.

See here and here for the background. The situation is unquestionably better, but it’s also unquestionably not what one would call a free market. I personally don’t see the value in the existing three-tier system, but as long as the political will to dismantle it doesn’t exist, we should push to loosen it as much as possible. I presume the craft brewers will have a wish list of specific legislation they’d like to pass by the time the session starts. It won’t be any easier this time around, because the big breweries will do everything they can to protect their legally mandated piece of the pie. I won’t be terribly surprised if they have one of their toadies introduce a bill to scale back in some way the gains the craft brewers won. We’ll need to keep an eye out for that.

Craft beer: Still good for your economy

Yet another study says so.

Texas ranks second only to California in the economic impact derived from craft brewing, a report from the Brewers Association says.

This burgeoning class of smaller, independently owned craft breweries, along with their distributors, retailers and bar/restaurant workers, added $2.3 billion to the Texas economy in 2012, the report says.

That’s part of an estimated $33.9 billion national number cited in the report, which the industry group said measures “the total impact of beer brewed by craft brewers as it moves through the three-tier system (breweries, wholesalers and retailers), as well as all non-beer products that brewpub restaurants sell.”

The Brewers Association said the nation’s 2,000-plus craft breweries and brewpub restaurants sold 13.2 million barrels of beer with a retail value of nearly $12 billion during 2012.

[…]

The Texas Craft Brewers Guild hailed the Brewers Association findings as confirming its own assessment last year that craft brewing could be upward of a $5.6 billion industry here by 2020.

The guild noted that Texas ranked fourth among the states in the number of craft-related jobs and third in “labor income produced from craft breweries through direct and indirect economic impact.”

It also found positive news in the state’s No. 34 ranking for per-capita economic impact.

“This finding clearly demonstrates … there remains significant room for growth for the Texas craft beer industry,” the guild said in a statement.

You can see the study here, and the Texas Craft Brewers Guild’s statement is here. The TCBG has done its own study with similar findings. You can see it with your own eyes – craft beers are on the menu at restaurants all over town, local microbrewers are expanding, and as a general rule new startups do a lot of hiring as they expand. I don’t think the market is anywhere near saturated yet. Keep on keeping on, y’all.

Craft beer bills now officially the law

Whatever you think of the vetoes or the special session action, this is unequivocally good news.

Happy hour started Friday afternoon for Texas brewers.

Gov. Rick Perry signed five bills representing the most comprehensive overhaul in two decades of how beer is packaged and sold across the state.

Thus, effective immediately, shipping breweries such as Houston’s Saint Arnold can sell a set amount of beer directly to customers, although they must consume it on-site.

And brewpubs like San Antonio’s Freetail can package and sell some of their products for distribution in other retail outlets. The latter change gives Texas restaurants that make their own beer the same ability to sell off-site as many out-of-state brewpubs.

“This is a great moment for craft brewers in Texas,” Saint Arnold founder Brock Wagner said. “It’s the first real reform we’ve seen in beer law, for craft brewers, since the brewpub bill.” He referred to the 1993 legislation that authorized licensed restaurants to make and sell beer for sale on-site.

The Texas Craft Brewers Guild hailed the signings as a “progressive step forward in making Texas the epicenter of craft beer development and growth” and predicted the law changes will mean not just more beer on store shelves but also “more jobs for Texans, increased tourism and greater tax revenue for the state.”

In Houston, the law allowing on-site consumption at shipping breweries would have the biggest immediate potential impact. Saint Arnold, for example, plans to begin offering “special and limited edition brews” for sale during its weekday and Saturday tours.

The basic tour at Saint Arnold’s won’t change – they’re not going to fool around with something that’s been such a success for them. Saint Arnold may start adding other events at which beer will be sold. I suspect there will be a lot of experimenting, and that’s just fine. The brewers and the brewpubs have been given a lot of new latitude, and it will take them awhile to figure out how best to take advantage of it for themselves.

Saint Arnold is the biggest player in the microbrewery space around here, but there are plenty of others now. One of them is Karbach, which hasn’t decided yet what it will do now that it can sell beer on premise. Karbach has been growing like gangbusters lately, so the new freedom they’ve been given comes at a great time for them.

Karbach Brewing Co., one of the nation’s fastest-growing craft breweries, has signed a distribution deal that will significantly expand its availability in stores, bars and restaurants from Beaumont to Galveston to Victoria.

In a separate deal, the Houston brewery also will begin selling beer in San Antonio next month, co-founder Ken Goodman said Wednesday.

To meet the anticipated demand, Karbach is completing a major expansion of its northwest Houston plant that will give it capacity to produce and sell up to 40,000 barrels annually, up from 15,000 barrels.

Karbach, which began sales in August 2011, produced more than 8,000 barrels in 2012, well ahead of internal forecasts. Goodman said he expects to sell 18,000 to 20,000 barrels this year.

That will include new sales in 17 counties across Southeast Texas through a distribution arrangement announced Wednesday with Del Papa Distributing Co.

Karbach had been delivering some beers on its own in a limited area, but the Del Papa deal will put year-round and special-release beers in a wider variety of stores and bars.

According to some research done by The New Yorker, based on newly released 2012 data gathered by the Brewers Association, Karbach was the second-fastest growing brewery in the country from 2011 to 2012, with sales increasing by a phenomenal 1112% over that year. You have to start at a pretty low level to grow tenfold, but still, that’s impressive. Overall, craft brewery production increased by 14% in the state, though the total volume of over 770,000 barrels is still peanuts compared to what an Anheuser Busch produces in a year. One reason why there’s been such growth is because there’s plenty of room for it. Texas is only 41st in the country in craft breweries per capita. A whole lot more of these places could open before the market even approaches saturation.

One more thing:

The brewers guild released new figures Friday showing that craft beer production in Texas was up 42 percent last year compared with 2011. It estimated the industry’s economic impact in the state was $737 million in 2012.

“Texas craft beer now accounts for an estimated 0.98 percent of all beer consumed in Texas, but it employs 59.7 percent of the people who work in breweries in the state,” it said.

The new figures don’t appear on the Texas Craft Brewers Guild website just yet, though you can still see last year’s study, which put the impact at $608 million. You can be sure that number will be even bigger next year.

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.

I knew all this beer harmony couldn’t last forever

We have some legislative beer controversy on our hands.

Sen. John Carona

Texas brewers would lose a potential source of capital and some flexibility in negotiating sales under a bill before the state Senate.

The Texas Craft Brewers Guild immediately opposed the legislation, as did one of the state’s two major groups representing wholesale distributors – which called it “asinine” and “anti-competitive.”

The bill, authored by state Sen. John Carona, R-Dallas, chairman of the Senate Business and Commerce Committee, would prohibit brewery owners from selling distribution rights for their beer and it would restrict them from selling beer at different prices in different geographic areas.

Scott Metzger, owner of Freetail Brewing Co. in San Antonio, has been actively involved in talks regarding a separate package of bills designed to help the state’s growing number of independently owned craft breweries and brewpubs.

He said the major provisions of the Carona bill were not raised during pre-session negotiations among lawmakers and industry stakeholders and he said the Craft Brewers Guild opposes all of them, whether in this bill or if they should be added later to other legislation.

[…]

Under the state’s three-tier distribution system, brewers cannot sell directly to retailers or consumers but must, with a limited exception for smaller breweries, enter exclusive contracts with wholesalers to sell the beer to retailers in designated territories.

Distributors can pay breweries for those rights, although payments are not required and can take different forms.

Donley said the practice is becoming more common as the craft segment grows. These generally smaller brewers reach a point where they need an infusion to expand, he said, and selling distribution rights is a potentially large source of capital.

Denying breweries this option goes against the charge of the pre-session working groups to stimulate economic development in the craft industry, he said.

Carona’s bill would not stop distributors from selling the rights to individual brands to other distributors.

The bill in question is SB639. Donley is Rick Donley, president of the Beer Alliance of Texas, which represents Silver Eagle Distributing and other major wholesalers, who opposes it; Keith Strama of the Wholesale Beer Distributors of Texas, supports it. There’s no quote from Sen. Carona’s office, but he did send a statement to author Ronnie Crocker after publication. Among other things, we learn that Carona is no longer one of the authors of the craft beer bills that would finally loosen some of the archaic restrictions on microbreweries and brewpubs; apparently, he decided to go a different route. Scott Metzger of Freetail has an interesting perspective on this at his blog:

It has not gone without notice that the proponents of this bill don’t have an interest in restricting themselves from raising prices in different markets, or from selling brands rights, but that they are only concerned about what they have to pay. In essence, this bill is one step short of the Texas Alcoholic Beverage Code having Mandated Profits for the middle tier. This is self-serving protectionism at its most blatant.

[…]

This Legislation amounts to nothing more than a blatant money-grab by the Wholesale Beer Distributors. It distorts the free market by protecting wholesalers from paying the cost of doing business. Ironically, no one has ever forced any distributor to pay for the distribution rights of a brewer. These are voluntary private-party transactions that occur because craft beer distribution rights are actually valuable and distributors are eager to out-bid their rivals for those rights. If you don’t want to pay, then don’t.

Luckily, this proposal is likely to go nowhere at the Capitol. My contacts up there have told me the Legislature is highly unlikely to move on Legislation that most of the industry hates, benefits only certain players, and goes against free-market principles.

Lastly, I’m thankful to Chairman Carona for filing this legislation. The WBDT was trying to amend Senator Eltife’s craft beer bills with this anti-competetive, self-serving language, and were promptly told no. But I suppose everyone deserves a chance, and I’m looking forward to hearing the WBDT try to explain any shred of public interest that might exist for this money grab.

See also this post for related matters, and this post for a fuller response to Sen. Carona’s statement. Metzger makes it clear in that latter post that he is speaking on behalf of the Texas Craft Brewers Guild. If they are OK with Sen. Carona filing this bill then I don’t see any reason for me to be unhappy about it at this time.

Here come the craft beer bills

From Brewed and Never Battered.

Senator Kevin Eltife (R-District 1) introduced bi-partisan legislation along with Co-Authors, Senators Brian Birdwell (R-District 22), John Carona (R-District 16), Eddie Lucio (D-District 27), Leticia Van de Putte (D-District 26), Kirk Watson (D-District 14), and John Whitmire (D-District 15) to modernize the state’s alcohol regulatory system to make more competitive Texas’s small, craft brewers.

Senate Bills 515, 516, 517 and 518 expand the rights of the state’s craft breweries and brewpubs to provide parity versus what brewers in other states are allowed to do.

From a Press Release put out by Senator Eltife’s office:

“Government shouldn’t be involved in picking winners and losers in private industry.  Texans believe consumers make the best choices about products in the free market,” said Senator Eltife.  “These four bills will level the playing field for the small business segment of Texas brewing industry.”

“Legislators should encourage entrepreneurial spirit by creating a climate for small business development opportunities that leads to capital investment and job creation in our state,” added Senator Eltife.  “This legislation will provide the proper regulatory framework for these businesses to operate and grow.”

What the Bills Do

SB 515

  • Increases the production limit for a brewpub from 5,000 to 12,500 barrels annually
  • Authorizes a brewpub to sell their products to the wholesale tier for re-sale
  • Authorizes a brewpub to self-distribute up to 1,000 barrels annual to the retail tier for re-sale

SB 518

  • Authorizes a production brewery under 225,000 barrels of annual production to sell up to 5,000 barrels annually of beer produced by the brewery to ultimate consumers for consumption on the premise of the brewery

SB 516 & 517

  • Authorizes a production brewery under 125,000 barrels of annual production to self-distribute up to 40,000 barrels annual of beer, ale and malt-liquor to retailers. (Note: this right currently exists but is being adjusted. Currently, a brewery under 75,000 barrels of annual production may self-distribute up to 75,000 barrels. These bills increase the size of a brewery that may self-distribute while reducing the amount they may self-distribute. There are two bills because it affects both the “Manufacturer” license – Ch. 62 of the code – and the “Brewer” permit – Ch. 12 of the code.)
  • Eliminates discrimination against out-of-state suppliers.

This is great to hear. I don’t remember there being this kind of broad support for previous bills, but if this is any indication there just might be a breakthrough this year. These bills encompass most, but not quite all, of what the microbrewers and brewpubs have been pushing for. Beer, TX notes the exception:

Notably, the bill regarding on-site sales for production breweries does not include any provision for selling beer for off-premises consumption or giving packaged beer away following tours. That had been a major push during the past two legislative sessions. In 2011, a bill made it through the House and Senate committee but was never called for a floor vote because of opposition.

That opposition hasn’t gone away and the small brewers abandoned efforts to include such a provision in this year’s proposals.

That’s a bummer, but sometimes you have to take a smaller step forward before you can get where you really want to go. Here’s Open the Taps:

Open The Taps continues to work closely with the [Texas Craft Brewers] Guild to help shape and guide the legislation and we are pleased with the general direction of the debate, but we believe these bills can and should go further by allowing microbreweries to sell set quantities of beer directly to patrons for off-premise personal consumption.

We will be working with members of the Senate Business and Commerce Committee and the House Committee on Licensing and Administrative Procedures to share our position and elicit their support.

I’d rather have stronger bills, too, but better to get these bills passed and come back in two years for more than fail again and have to start all over again in two years. Passing these bills will be progress, and we need that. The key is that the usual suspects do not appear to be standing in the way this time, as the Chron story notes.

Several of the parties involved in developing the proposals say there is at least some agreement within the industry and in the state Senate.

“Conceptually, we’ve agreed,” said Rick Donley, president of the Beer Alliance of Texas, which represents Silver Eagle Distributing and other major wholesalers.

[…]

Charles Vallhonrat, executive director of the Texas Craft Brewers Guild, applauded the work of lawmakers “in bringing industry stakeholders – from small and large brewers to distributors and retailers – to the table to discuss how to make Texas a compelling place for breweries to do business.”

Scott Metzger, the Freetail owner who pushed for a brewpub bill two years ago, agreed that pre-session working groups organized by Van de Putte created “a really good, open process.”

Getting past that opposition is huge, but nothing is certain until the governor puts his signature on it. As always, now is an excellent time to contact your Senator and your Representative to let them know you support these bills, and you would like them to support these bills as well.

Craft beer is good for Texas

Because it can’t be said too often, am I right? Here’s a brief Q&A with Charles Valhonrat, the executive director of the Texas Craft Brewer’s Guild.

Q: What are your goals for the 2013 legislative session, and how do you plan to get lawmakers on board?

A: There are two primary goals we are driving with respect to legislation. One is legislation that will allow package breweries – breweries that today keg, cask, bottle or can their beer for sales into the distribution tier – to sell a limited amount of beer at their breweries directly to their patrons. This would mean selling beers in a tap room setting for enjoyment while on premises.

Additionally, this change would also allow the brewery to sell their packaged beer to visitors to be enjoyed at home. By taking advantage of the opportunity of having craft beer fans on site, craft brewers would be able to make the most of the marketing opportunity this creates and build greater demand for their product in the traditional three-tier system of distribution.

Another legislative goal is to allow brewpubs to sell their beer into the wholesale tier.

Today, brewpubs can sell their beer on premise, including packaged beer that usually goes out in things like growlers. But, fans of a certain brewpub cannot find that brewpub’s beer at a local liquor or grocery store.

We are advocating statutory changes that would allow brewpubs to package and sell their beer through the three-tier distribution system here in Texas.

We’ve heard this before, and there’s nothing new to add. I repeat it here as a reminder that we’ve been through this before – this is the fourth time that the craft brewers have tried to change Texas’ archaic laws regarding the sale of beer in a way that benefits consumers rather than distributors – and we’re going to have to keep saying this stuff until we finally get what we want. It may not happen this session, it may not happen in the next session, but it will never happen if we stop talking about it and advocating for it.

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.