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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.

Anheuser-BuschInBev to buy Karbach

If you can’t beat ’em, buy ’em.

Fast-growing Karbach Brewing Co. of Houston is the latest U.S. craft brewery to be acquired by a global beer giant, announcing Thursday morning that Anheuser-BuschInBev is buying it for an undisclosed amount.

The 5-year-old Karbach will be part of the company’s U.S.-specific High End business unit, joining the likes of Stella Artois and Shock Top; Goose Island, Breckenridge, Elysian and five other craft breweries; a cider company; and a hard seltzer company.

Ken Goodman and longtime business partner Chuck Robertson, who founded the brewery in a building they formerly used in their beer distributorship on Karbach Street, said existing management and brewers will remain in place and the company will retain much of its independence while also gaining access to the resources that will help it continue to grow.

“The financial piece wasn’t that important at the end of the day,” Goodman said. “It was the resources.”

High End president Felipe Szpigel cited Karbach’s Love Street Kölsch as an example of a lower-alcohol, or “session,” beer that will fill a niche in the AB-InBev portfolio.

He said he first visited the Karbach brewery during a site visit to Houston about a year and a half ago and as he talked with the owners and brewers, “I really fell in love with what they are doing.”

Brewmaster Eric Warner said the move will allow his team to collaborate with those other craft breweries.

“The High End wants to see us innovate,” he said.

Szpigel and the Karbach team said they will continue to focus on developing the Texas market for the next couple of years.

I’m sure that quote about “resources” is a reference to the ABinBev distribution network, which is more a comment on Texas’ byzantine and archaic beer laws than anything else. I’m sure the Karbach founders (and I hope their employees) will nonetheless make a nice chunk of change off of this, and more power to them if they do, but a peek at their announcement of the deal on Facebook shows that the reaction from their customers is overwhelmingly negative. This is no surprise – ABinBev has openly mocked craft beers and the people who drink them in their advertising, and well, anyone who drinks Karbach almost certainly thinks ABinBev products are exactly what’s wrong with beer and the reason why breweries like Karbach needed to exist and have done so well. From a brand perspective, it’s at best a shotgun wedding and at worst a complete hash. I’m sure that Karbach will sell a lot more beer as a result of this deal. I just suspect that very little of that beer will be consumed by people who had ever drunk it before today. Swamplot and Houstonia have more.

Karbach’s new brewery

As we know, Houston has a lot of craft breweries, with the venerable Saint Arnold being the biggest, oldest, and best known. With the forthcoming opening of their new facility, I’d say Karbach is making a strong case to be next in the pecking order.

Karbach, founded four years ago by a pair of longtime distributors/importers who brought resources as well as experience to the enterprise, stands out even in an industry where rapid growth is the status quo and where production volume soared in double digits again last year.

In 2013, Karbach was cited in a New Yorker analysis as the second-fastest growing craft brewery in the U.S. and 2014 was a scorcher as well. Crews worked around the clock to brew 32,600 barrels of Hopadillo, Weisse Versa and other beers, and the only thing that kept them from making more was capacity.

The size of the new brewery, which faces Dacoma, around the corner from the original facility at 2032 Karbach, just outside Loop 610 in northwest Houston, addresses the immediate needs and leaves room to add on later. [Brewmaster Eric] Warner said the new equipment and automation upgrades also should improve quality and virtually eliminate inconsistencies between batches.

He and his team are already making beer there and plan to open the brewery to the public on or about May 15, slightly behind the originally announced first-quarter target date.

The facility goes live as the industry continues an enviable upward trajectory. In 2014, craft sales rocketed ahead 18 percent even as overall beer production rose a mere half-percent, the industry trade group reported at this month’s Craft Brewers Conference. A record 3,418 breweries are now in operation, figures compiled by the Brewers Association show, and 2,051 more were in the planning stages as of Dec. 31.

Across greater Houston, 29 brewery and brewpub licenses are on file with the state and most of those operations are up and running. In addition, strong brands from other states continue to expand into Texas.

Warner, who came to Houston in 2011 with a nationally recognized résumé in craft brewing, sounded nothing but confident about Karbach’s growth plans in this environment.

“Craft is here to stay,” he said. “I have no doubt about that. Craft is growing and will continue to take share.”

The primary challenge ahead will be to maintain shelf space at stores and tap handles in bars and restaurants, Warner said. In that regard, he thinks high-quality local brands will have a distinct advantage. He said Karbach plans to expand to the Dallas area this year but has no out-of-state plans until at least 2017.

“There are 30 million people in Texas,” Warner said. “A lot of beer drinkers.”

Another potential challenge, he added, would be if global giants such as Anheuser-Busch InBev, which last year made 13 million barrels of beer at its Houston plant alone, stop “dabbling” in craft beer styles and begin competing seriously with the Karbachs and Saint Arnolds.

Again, Warner sounded confident about the future, describing his company’s success in less than four year as “surreal.” He readily acknowledges the advantages Karbach has over many of the young breweries that are starting with far less capital.

I like Karbach, though Saint Arnold is still my favorite locally. I do need to take a tour of their new facility, which is one of several near where I live. As far as the macrobrewery threat is concerned, I just don’t see the AB-InBevs of the world seriously competing in that space. It’s not who they are, and I don’t see the type of person who drinks craft beer being lured to a craft beer-style product they might market. I think it’s more likely the big boys might try to buy up a bunch of craft brewers, like Microsoft or Google acquiring startups. I don’t know why they haven’t been doing that all along, to be honest. Be that as it may, congrats to Karbach on the new digs, and best of luck with the restaurant venture.

Who’s up for a macrobrewery tour?

This used to be a thing in Houston, and now it is once again.

beer

The local Anheuser-Busch plant was under construction at the same time as the Astrodome, and its ambitions were just as grand. With an annual capacity of 900,000 barrels of beer, it would be the biggest brewery Houston had ever seen when it opened in 1966.

It would draw its fair share of visitors as well. For a couple of years in the early 1970s, the 105-acre plant grounds were home to an avian-themed park called Busch Gardens, which included an Asian-style pagoda, boat rides and a domed ice cave. College students in miniskirts worked as hostesses during the summer.

Even after the park closed, Houstonians curious about malt, hops and “beechwood aging” made their way east down Interstate 10 to tour the brewery and hoist complimentary beers in the hospitality room.

But by 1996, attendance had fallen to the point that the corporate owners decided to do away with regular tours. The workers would remain focused on producing Budweiser, Bud Light and other well-known beers by the hundreds of millions of cans and bottles, but the public would be kept at bay.

Nineteen years and a sea change in the U.S. beer industry later, the company is throwing open the doors again in an effort to reconnect with consumers. An array of craft breweries unheard of two decades ago has nibbled away at market share, gaining fans not just with innovative products but also with wildly popular tours and special events that pack in crowds and send them home in branded T-shirts and ballcaps.

Damola Oshin, general manager of the Anheuser-Busch brewery, credits Houstonians’ growing interest in beer with the decision to reinstate tours here next week.

“We are the largest brewery in the state and we do need to get people in through our doors and show them what we do,” he said Thursday.

Beginning April 10, the brewery will be open from 10 a.m. to 6 p.m. daily. Visitors will be guided through the brewing and packaging areas and wrap up in a renovated tasting room for complimentary samples. A gift shop includes souvenirs from hats, T-shirts and coolers to stuffed Clydesdale toys.

[…]

Saint Arnold Brewing, the only local craft that was open in 1996, draws an estimated 70,000 visitors annually to its tours and tastings and another 30,000 to other events at the brewery, owner Brock Wagner said.

Now Anheuser-Busch wants the public to know its employees are as passionate and as proud of their work as are craft brewers, Oshin said.

Good for them. My wife, who grew up in Houston, has some fond memories of the bird park at the brewery that kids played in while their parents could quaff a cold one after a tour. I’d be interested in touring the place just to see what it’s like; I vaguely remember a visit to Busch Gardens in Tampa while on spring break in the 80s, which included a brewery tour. I have no desire to sample or buy any of their product, but I’m sure the operation would be cool to see.

The macrobrewers are expanding, too

In addition to all the new microbrewers that are sprouting up, giant international conglomerate Anheuser-Busch InBev will be spending a bunch of money to improve and expand its operations.

The local Anheuser-Busch InBev brewery is using a major capital infusion from its corporate parent to reduce water usage and boost the amount of beer it can make by half a million barrels.

Upgrades at the 45-year-old plant include the overhaul of large vessels used in brewing, improvements to the can- and bottle-filling process and a re-piping of lines used to recycle water for cooling and other purposes on-site.

AB InBev announced Tuesday that it was spending $1 billion at its domestic breweries, including $34 million at the Houston brewery and $40 million at the affiliated Longhorn Glass bottle-making facility.

Beer, TX has the press release. Among other things, this will allow the brewery here to add a couple more Bud products to its lineup. I haven’t consumed a Budweiser product since the 90s so this doesn’t really affect me, but a few million bucks into the economy is good news. Even better news is this:

AB-InBev also is spending money to reduce water consumption at the plant, which currently uses 3.5 barrels of water for every barrel of beer produced. Since not all of that winds up in beer, the plant has many opportunities for reusing water.

“We have a lot of water usages that don’t require potable water,” said resident engineer Chad Brownell, adding that multiple recycling projects are under way.

Brewmaster Dave Cohen said the company’s North American zone has a goal of reducing water usage to 3.25 barrels per barrel of beer made by the end of next year. He said such efforts are key “both for environmental and good business goals.”

I’m sure that will save them some money, and that’s all to the good. Hopefully they’ll have further goals for reduction after this one is achieved.