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Beer to go is here

Hooray!

The highly anticipated beer-to-go legislation officially [went] into effect Sunday, and local breweries [celebrated] the occasion by offering up cans, growlers and crowlers of beer for visitors to bring home — a simple act that has been illegal in the state of Texas until now.

“We still don’t really believe it,” said John Holler, who along with his wife Kathryn, owns Holler Brewing in Houston’s Sawyer Yards district. “Without this, our beer would never be in a can, because at our size, it just wouldn’t make sense to sell cans unless we could sell them directly to the consumer.”

John Holler has been a key part of the push to help Texas become the 50th state in the nation to allow beer-to-go sales, joining the board of the Craft Brewers Guild. While Texas craft brewers spent more than a decade advocating for beer to go, it wasn’t until the run-up to this 86th Legislature that the movement reached is full force with the formation of the guild, a political action committee.

[…]

For some of the city’s larger breweries, the novelty of being able to sip their beer from cans isn’t quite as potent as it is for Holler, where beers have always been available exclusively from the tap.

At Southern Star Brewing in Conroe, brewers will celebrate by releasing some of their specialty beers, like a tequila-aged Trippel and others in can and growler-fills.

It’s been too long since I’ve visited some of these places. Time to start planning some Saturday outings, now that the heat should begin dissipating a bit. We wanted this for a long time, now let’s make it count.

Here comes beer to go

Hooray!

Starting Sept. 1, Texans will be able to leave brewery taprooms with a case of their favorite craft beer, and order wine and beer for delivery, thanks to two laws passed by the Legislature this year.

Brewers and beer lovers around the state fought for beer to go, saying it will boost business and drive tourism to Texas.

“It’s going to be a really cool opportunity to showcase our ability in a different light,” said Rachael Hackathorn, taproom manager at the Austin-based Zilker Brewing Co. “For an out-of-town guest to take our beer back home with them and share it with their friends, that’s really what beer culture is about.”

Texas beer sales run on a system of three tiers: manufacturers who make the product, distributors who take it to market and retailers who sell it to customers. In the past, some beer distributors were opposed to beer to go, saying it would interrupt the state’s beer market and that Texas should continue its strict separation of the three tiers. The rationale behind the system is that it prevents anyone in one tier from controlling any of the activities of the other two tiers.

But this year, the distributors and brewers came to an agreement to allow brewers more access to the retail tier.

“Quite frankly, we were just tired of all the negative publicity and people not understanding the nuances of the three-tiered system,” said Rick Donley, president of the Beer Alliance of Texas, an organization that represents distributors. “That’s the reason we agreed to a very limited amount of beer to be sold per customer per craft brewer.”

Sen. Dawn Buckingham, who authored the legislation, said although it was first met with some “significant opposition” from the distribution and retail tiers, she was happy to see the parties eventually come to an agreement.

“Beer to go was kind of the perfect example of the little guys being overrun by the process,” said Buckingham, a Lakeway Republican. “It seemed a little crazy that Texas would be the only state where you can’t go to a brewery and bring home a little bit of beer.”

See here for the background. Another bill, to allow home delivery of beer and wine, via Amazon or other means, will also take effect on the first. As you know, I think the three tier structure is an anachronistic load of hooey that should be chucked into Lake Houston, but whatever. Somehow, the beer distributors decided it was in their best interests to declare peace, and this was the result. I’m happy with the outcome, regardless of my feelings for the underlying structure. Bottoms up, y’all.

Biking and breweries

Actually, this makes perfect sense.

This started off in the gray area between a good idea and a bad one. Two years ago, Jason Buhlman and Brian Kondrach got about 30 of their friends together for an afternoon of two-wheel tourism, in which they aimed to bike between as many breweries as possible in one day.

“At the time, there were only eight breweries that we could do inside the Loop,” Kondrach explains to a group of prospective riders on a sunny Saturday afternoon in late June. “It took us 14 hours. We were way too drunk. It was a mess.”

“A mess,” echoes Buhlman, who is standing just to the right of Kondrach, wearing a baseball T-shirt with the motto, “Wheels Down, Bottoms Up,” printed across his chest.

“So we put some rules on it,” Kondrach continues. “We made it so it was only 45 minutes at each stop – just one pint each, and then we move. And we added two breweries and did it again six month later.”

The ride was still fun. But much less … sloppy. And that’s when Buhlman and Kondrach realized that a curated version of this could potentially lay the groundwork for a business that could combine two of their loves: Craft beer and bicycles.

Then last May, their business, Tour de Brewery, was born. Rather than 10 breweries in an afternoon, they offer shorter tours in distinct pockets of the city, featuring about three breweries apiece.

[…]

Across Houston, breweries are becoming more bike-friendly. At Saint Arnold, a BCycle bike-share station opened earlier this Spring; there are plans to unveil one at 8th Wonder by the time the summer is through; and hopes of opening a third in Sawyer Yard, in close proximity to three breweries. And some of the city’s breweries are forming bike teams, and hosting bike crawls of their own. But as all this happens, it raises one big question: Should people hop on bikes after drinking?

“We’ve have people approach us and ask, ‘Why would you put a station at Saint Arnold or 8th Wonder?’” says Henry Morris, a spokesman at BCycle. “And the answer is, well, they have parking spaces. People drive there and drive back and they’re expected to be responsible. So if you take a bike share to a brewery and you have too much to drink, you should call an Uber home.”

That’s why the guys at Tour de Brewery emphasize that their outings are about discovering new beers.

“If you’re going to bike and drink, it’s important to remember that it’s a tasting experience,” says Jessica Green, director of development for Bike Houston, which is on track to add 50 miles of bike lanes to the city this year, including a stretch that will help cyclists close the gap between 8th Wonder and Saint Arnold. “Have one beer, and then ride. And the riding will help you metabolize the alcohol. But don’t drink more than a beer or two an hour, which is when you get into getting drunk.”

Not to put too fine a point on it, but these breweries are neighborhood institutions as much as anything else, in the spirit of the old corner bar. They draw their customers mostly from their nearby surroundings, not the wider region. Also, and especially for the breweries in the inner core, parking is at a premium. That’s a combination that incentivizes biking, on both sides. For sure, as the story notes, you should imbibe carefully if you do this. Honestly, though, the same would be true if you drove. So plan your route, pick your spots, maybe give Tour de Brewery a look, and enjoy your afternoon.

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.

We may actually get beer to go this session

Well, what do you know?

The Texas Senate restored a measure Wednesday allowing breweries to sell beer to go from their taprooms to a bill allowing the Texas Alcoholic Beverage Commission to continue operating. It also approved a measure that would loosen restrictions on the number of liquor store permits individuals can hold.

State Sen. Dawn Buckingham, R-Lakeway, said her amendment allowing breweries to sell beer to go — something allowed in every state except Texas — would foster job creation, economic development, entrepreneurship and tourism.

“We stand our best when we stand together, and we come together on issues that have been divisive in the past,” Buckingham said during the floor debate. “Our constituents elected us to be bold — and with that, I give you beer to go, baby.”

[…]

The Senate’s beer-to-go amendment was made possible largely by an agreement between the Wholesale Beer Distributors of Texas, a large lobby group representing the interests of beer distributor; the Texas Craft Brewers Guild, which represents the interests of local breweries; and the Beer Alliance of Texas, another group representing distributors.

The Wholesale Beer Distributors of Texas didn’t sign on when the truce was originally made in February but agreed to the sign on with the other two groups earlier this month.

See here and here for the background. The bill that was approved, HB 1545, is as noted the sunset bill for the TABC, so the addition of beer to go (as well as an amendment allowing for earlier beer and wine sales on Sunday, which was struck in the Senate process) was technically shenanigans, but the best kind of shenanigans. Also added was an amendment that greatly raised the number of liquor store permits am individual can hold. These changes now head back to the House for approval, and if that happens it’s on to Greg Abbott for a signature. I will be holding a beer in reserve to raise when and if that happens. Here was a Twitter thread from the Texas Craft Brewers Guild from before the Senate hearings on HB1545, here’s a statement from State Rep. Eddie Rodriguez, who had filed his own beer-to-go bill and was the one who successfully amended HB1545 in the House. The Current and the Chron have more.

House liberalizes beer sales

It was a bit of shenanigans, but all things considered that seems entirely fitting.

The Texas House voted Thursday to extend beer and wine sales on Sundays and to let craft breweries to sell beer to go.

Those new expansions of alcohol sales were amendments to a broader bill regarding the efficiency and operations of the Texas Alcoholic Beverage Commission that must pass this legislative session in order to avoid shutting down the agency.

Both amendments were opposed by the bill’s author, state Rep. Chris Paddie, R-Marshall. Paddie still cast a vote for the legislation, which received preliminary passage along a 135-0 vote, though he noted that the bill was no longer “completely clean.”

[…]

The two amendments proposed by state Reps. Drew Springer, R-Muenster, and Eddie Rodriguez, D-Austin, consumed most of the debate Thursday. Springer’s amendment would allow beer and wine sales to begin at 10 a.m. instead of noon on Sundays in licensed retailers such as convenience and grocery stores. It passed in a 99-40 vote. In laying out his amendment, Springer said his motion would put wine and beer sales in line with what’s currently allowed at on-premise consumption locations, such as restaurants and bars.

“We allow country clubs to sell mimosas at 10 a.m.,” Springer said during the debate on the House floor.

He also said his proposal won’t affect liquor stores, which aren’t allowed to operate on Sundays.

The passage of Springer’s amendment was met with a chipper response from state Rep. Terry Canales, D-Edinburg, who exclaimed upon its passage: “This is freedom. This is eagles!”

The House narrowly approved Rodriguez’s amendment allowing craft breweries to sell beer to go — something that’s already legal in every other state, the representative said Thursday evening.

Here’s HB1545, which is now on its way to the Senate. Because this was supposed to be just a sunset bill, there’s a very good chance both of these amendments will be removed from the bill in the upper chamber. But who knows, maybe the time has come. I wouldn’t bet on it, but crazier things have happened.

A beer truce is declared

Well, glory be.

Beer brewers and distributors and have been battling for years over what can be bought and sold at breweries across Texas.

This week, two key groups in the fight finally signed a truce.

The Texas Craft Brewers Guild, which represents the interests of local breweries, and the Beer Alliance of Texas, which represents the interests of beer distributors, have inked an agreement proposing that Texans be allowed to buy up to two cases of beer per person, per day in places where beer is brewed.

[…]

Regulatory reforms passed in 2013 allow breweries that produce fewer than 225,000 barrels, or about 3 million cases, of beer each year to sell up to 5,000 barrels for on-site consumption. Proposed bills filed by Rep. Eddie Rodriguez, D-Austin, and Sen. Dawn Buckingham, R-Lakeway, would expand the law to allow the beer to be taken to-go from local taprooms.

The agreement between the two sides came in the form of a proposed new version of the Rodriguez and Buckingham bills. The added provisions include keeping the 5,000 barrel cap, limiting the amount that can be taken home and for packaged beer to have alcohol content posted clearly on its labels.

The compromise would also require breweries to report beer-to-go sales to the Texas Alcoholic Beverage Commission on a monthly basis.

And the groups agreed to refrain from lobbying to change the fluid-ounce caps of malt beverages for 12 years.

As you may recall, I discounted the possibility of this happening as the session was starting. I’m delighted to be proven wrong, though as the story notes the bill still need to pass. The other lobbying group, the Wholesale Beer Distributors of Texas, are not part of this agreement and thus could work to defeat it. It does feel like there’s an end in sight, which would be good news for everyone. Let’s get this done.

Is the craft brewing business in a slowdown?

Item one.

Alluring as those wide-open skies and rugged vistas may be, the hardscrabble life in West Texas can be unforgiving. And so it was last year for the region’s popular and award-winning craft brewer, Big Bend Brewing Co., despite a planned expansion to San Antonio that might have turned its luck around.

In December, the 6-year-old brewery surrendered to multiple challenges and announced it was shutting down Big Bend Brewing’s hometown operations and taproom in Alpine and abandoning the move to San Antonio.

“We had high aspirations and lofty goals, and we did everything we could to achieve them,” read the Dec. 21 Facebook post announcing the closure. “We remain hopeful and are working hard to make the stoppage temporary. The goal is to come back better than ever. We are no stranger to adversity – forging a craft beer brand in the rugged frontier of West Texas is no easy task.”

[…]

“The main trend is if you’re a local brewery doing small-batch beers, with an old-school small brewpub and restaurant model – those that are still popping up – if they are well-enough financed, they seem to be doing OK as local or hyperlocal places,” said Travis Poling, co-author of San Antonio Beer: Alamo City History by the Pint.

“But the time of the large regional breweries seems to have kind of come and gone,” Poling added. “Everybody wants to be the next Sierra Nevada or Sam Adams, but … the barrier to entry is a lot higher because there’s a lot more competition not just from larger regional brewers, but also the regional breweries bought up by Anheuser-Busch, Coors, and others.”

The Brewers Association reports there are 6,372 breweries in the nation, and of the $111 billion overall beer market, craft beer accounts for $26 billion, up 5 percent in 2017. Texas ranks ninth in the country for most craft brewers with 251 total breweries, or 1.3 per capita. The industry had a $4.5 million impact on the state’s economy in 2016.

In March, Brewers Association Chief Economist Bart Watson wrote, “Compared to many parts of the U.S. economy, craft’s 5% growth rate [in 2017] is quite strong. That said, it’s probably not as strong as many breweries expected as they built their business plan.”

“It’s a difficult time to invest in craft beer,” [Mahala Guevara, vice president of operations for Big Bend Brewing] said. “There’s been an enormous number of breweries opening in the last five years, and we’ve seen a lot of high-profile closures and reductions-in-force and layoffs. Five years ago, the market was going wild, everyone was making money, experiencing tremendous growth. Now there’s depressed investment in craft beer, so even though people are interested, everyone wants to wait out the business cycle.”

I don’t think the cash flow problems of one brewer in a rural part of the state is representative, but I’m keeping an open mind. Item two:

“I think people think Houston is getting saturated, because they haven’t been to a big beer city,” Platypus Brewing’s head brewer Kerry Embertson told me last week during an interview. “Like, Houston’s beer scene is relatively new. Yes. There are the St. Arnold and Southern Stars that have been around forever. But there’s a bunch of people like us that have been around three years or less. There’s plenty of room to make good beer, and customers will come to your place. Especially as spread out as this city is.”

John Holler, who co-owns Holler Brewing along with his wife Kathryn, just a couple blocks from Platypus echoed his colleague’s thoughts.

“I think Houston can definitely accommodate more breweries,” Holler said, during that same interview for an upcoming story. (Sorry! No spoilers!) “The key is, you know, we can accommodate probably 20 or 30 more Platypuses or Hollers. But not 20 or 30 more Saint Arnold.”

This story was based in part on a recent NYT story on the slowdown in growth of the craft brewing industry, and noted the switch from beer to cider at Town in City Brewery. As far as Houston goes, I think John Holler is exactly right. There’s still plenty of room here for small breweries that mostly serve the neighborhoods they’re in and a few bars and restaurants in town. Very few, if any, of those places are going to grow up to be Saint Arnold, or Karbach. Nothing wrong with that, and no reason to panic. Just a bit of perspective.

Time again for craft brewers to get their legislative hopes up

We’ve seen this movie before. I hope for a better ending, but I’m keeping those hopes modest.

Texas is the only state in the country that prohibits some breweries from selling six-packs, bottles and growlers of beer to-go, but a pair of bills filed for consideration during the 86th legislative session aim to change that.

Sen. Dawn Buckingham (R-Lakeway) and Rep. Eddie Rodriguez (D-Austin) introduced companion bills SB 312 and HB 672, respectively, which would allow manufacturing breweries to sell beer to drinkers for off-premise consumption.

[…]

In 2015, North Texas’ Deep Ellum Brewing Co. and the now-defunct Grapevine Craft Brewery sued the Texas Alcohol and Beverage Commission over the issue and lost. Earlier this year, the court ruled in favor of the TABC, citing the potential impact to Texas’ three-tier system, which aims to avoid conflicts of interest between alcohol manufacturers, distributors and retailers.

In the decision, however, the judge noted that off-premise sales were granted to distilleries and wineries by the legislature, not the courts. That and the support shown for to-go sales during both the Republican and Democratic conventions in 2018 is giving the Texas beer industry hope that the legislation will pass.

I noted the lawsuit back in 2015, but missed that it had been decided. The story here has always been that the beer distributors’ lobbyists are mightier than everyone else. Maybe this year it will be different – hope springs eternal – but it is always safer to bet on the house. Alas.

Beer for dogs

We live in strange but wondrous times.

When Megan and Steve Long tell friends and customers about their newest venture, Good Boy Dog Beer, more often than not, they’re met with the same three questions.

One: Is it really for dogs? (Yes.)

Two: Is it alcoholic? (No.)

Three: Can I drink it? (Um, sure?)

The beer doesn’t exactly dance on a human palate, thanks to a complete lack of sodium. But that was never the intention. The Longs, who own Henderson Heights bar in the Sixth Ward and Reserve 101 downtown, wanted to create a new product that mixed two of their favorite things on the planet — beer and dogs.

They’re not pretending to be the first people with the idea. There’s been a scatterplot of breweries offering pints for pups for more than a decade now. But they do seem to be the first in Houston, a city that has become increasingly dog-friendly in recent years, thanks to a growing number of patio bars willing to let four-legged friends tag along for Sunday funday. And that Fido-forward culture has helped the Longs find immediate success.

Within weeks of their launch, all three flavors of their beer — IPA Lot in the Yard, Mailman Malt Licker and Session…squirrel! — are available in 15 bars throughout the city, including Front Porch Pub and FM Kitchen and Bar, for a recommended price of about $5 a can. And they’re getting requests to ship cans across the country.

So yeah, it’s not beer in the sense that you or I know it. But it comes in cans and it’s served at bars, so close enough. Good for the Longs, finding a niche and filling it.

The beer boom continues

Raise a glass.

There were a dozen craft breweries across the Houston metro before 2013, and that seemed like a lot at the time.

Now, there are 52.

The new breweries have added 344,487 square feet of industrial space — roughly the size of a 14-story office building — to the local market, according to a new report from commercial real estate firm NAI Partners.

[…]

NAI said cities in Texas are “wildly underserved.” Only 12 of the 52 breweries are inside the 610 Loop, the report said, citing data from the Houston Beer Guide.

The report is here. On the one hand, I’m a little surprised there aren’t more breweries inside the loop, since they’re very much a neighborhood business and benefit from having a lot of potential customers in close proximity. On the other hand, real estate prices are such that it’s practically a miracle any breweries are inside the loop. However you look at it, I do agree there’s room in the market for further growth. We were behind the curve on this trend for a long time, and we’re still catching up.

Beer delivered to your home

Who needs groceries, am I right?

Favor, founded in Austin in 2013, prides itself in delivering almost anything in under an hour. But until now, beer and wine — long the No. 1 request from customers — was among the missing.

Favor finalized all the proper permits and licenses to deliver beer and wine in late 2017 or early 2018. But it was the partnership with H-E-B — and the grocery company’s wide selection — that made the delivery service possible, [Jag Bath, Favor CEO and H-E-B chief digital officer] said.

Favor will offer H-E-B’s entire beer and wine selection with no minimum order size. Because every H-E-B store is tailored to its neighborhood, the selection will vary by city. Houston-area selections will include such craft brands as Buffalo Bayou Brewing, No Label Brewing, Lone Pint Brewery and 8th Wonder Brewery, and wines from the Texas Hill Country.

This isn’t the first beer delivery service in Houston. HopDrop launched late last year to provide local craft and hard-to-find beers.

Oftentimes, it delivers brews that are available only on draft.

HopDrop also provides on-demand delivery in under an hour. Customers place an order online, and a driver is dispatched to a partner bar. That bar fills a 32-ounce can, called a crowler, with beer and gives it to the driver for home delivery. HopDrop has partnered with bars throughout the Houston area, from Spring to Katy, from downtown Houston to Webster, to ensure customers receive their orders in less than an hour.

The delivery fee is $5.99 plus the cost of beer. HopDrop also offers a monthly subscription service that waives the delivery fee and provides customers same-day orders from any partner bars throughout the greater Houston area. This allows a customer in Katy to get beer from a bar in Spring.

Its focus on beers typically unavailable in grocery stores will differentiate HopDrop from the new delivery service provided by Favor, co-owner Steven Macalello said. He isn’t worried about the competition. In fact, he thinks it’s good publicity for beer delivery overall.

I get the market for home delivery of groceries. Not used it myself, but I see why people do. This one’s a little less clear to me – are there really that many people who need an on-draft microbrew brought to their door? Maybe that’s just a failure of imagination on my part. I guess if you’re the grocery-delivery consumer anyway, or maybe if you’re just grocery-delivery-curious, being able to add a six-pack to the order sweetens the deal. Is this something you would use?

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.

Microbrewery legal setback

Kind of a lousy Christmas present.

Three Texas brewers are going back to battle with the state after an appeals court reversed a decision that would have allowed them to sell their distribution rights for monetary compensation.

In 2014, Peticolas Brewing Co. (Dallas), Revolver Brewing (Granbury) and Live Oak Brewing Co. (Austin) sued the Texas Alcohol and Beverage Commission, saying a newly passed law related to who could sell a brewery’s distribution rights was unconstitutional. The mandate, which passed in 2013 with a bundle of other beer regulation reforms, said breweries may not accept payment for contracting with a distributor, but that a distributor could get a payout if it sold those same territorial rights to another distribution company.

Last year, a judge served victory to the breweries. But on Dec. 15, the Texas Third Court of Appeals reversed that decision. It stated, in part, the law does not prevent the brewers from successfully operating their businesses and that it also upholds the industry’s three-tier system, which aims to avoid conflicts of interest between alcohol manufacturers, distributors and retailers.

The decision will be appealed to the Texas Supreme Court, according to a statement from Institute for Justice, which is representing the breweries.

“It is well established that the Texas Constitution protects economic liberties, and these rights do not cease to exist when the government begins licensing and regulating individuals and businesses,” said Arif Panju, managing attorney for Institute for Justice’s Texas office, in a statement. “Every business in Texas should be concerned with the court’s ruling in this case. It is dangerous and we will ask the Texas Supreme Court to reverse.”

See here, here, and here for the background. You know how I feel about this. The three-tier system is an anachronism and a travesty, a glaring counterexample to any politician’s paeans to how Texas has a great business environment. Yet it persists, a lasting tribute to the lobbying efforts of the beer distributors and the big breweries that support them. As with so many things in this state, the ultimate solution is going to have to be a political one. Nothing will change until we elect enough people who want it to change. Austin360 has more.

Buffalo Bayou Brewing to build new facility

We remain in a craft beer renaissance.

Buffalo Bayou Brewing Co., which launched nearly six years ago with a beer called 1836 honoring the date of Houston’s founding, is preparing to break ground on a $14 million brewery and restaurant that would be one of the largest and most visible of its kind in the city.

The announcement marks another milestone for the industry, as breweries continue to pop up and civic boosters market them more heavily.

The three-story, 28,000-square-foot Buffalo Bayou Brewing facility is planned for Sawyer Yards, an artist studio-anchored development just south of Interstate 10 near downtown, the Woodland Heights and other bustling neighborhoods. The brewery would boost production capacity significantly and take fuller advantage of state laws that allow it to sell some beer on-site.

Founder Rassul Zarinfar said his business outgrew its original location, a converted warehouse near Memorial Park that is expected to ship about 8,000 barrels this year. The new facility, 3 miles away and expected to open in 2018, will provide immediate relief and could be expanded over time to a 50,000-barrel capacity.

The company has begun the permitting process and expects construction to take nine months.

The new site will include a taproom and 200-seat restaurant that would be larger and more comfortable for visitors, who currently squeeze into an un-air-conditioned corner of the brewery and a small outdoor patio to sample the wares and snack from food trucks.

Full- and part-time employment would approximately double, to about 100, Zarinfar said.

[…]

[Last month], Houston tourism officials began selling one-day, three-day and 90-day Brew Passes at VisitHouston.com that purchasers can redeem for a sample flight of beers and other discounts at six Houston breweries.

Maureen Haley, director of strategic tourism initiatives at Visit Houston, said locals and tourists alike seek out unique experiences.

“As more breweries that have smaller production get into the game, you have to go there to get the beer,” she said.

I’ve been to a few events at the current Buffalo Bayou location. Good beer, but definitely crowded and loud as a result, and parking – it’s on one of the narrow streets a block south of I-10 between Shepherd and TC Jester – is a problem. The new location sounds great, and I look forward to visiting. Also, I need to get a couple of those three-day Brew Passes for the next time my dad is in town. Best of luck with the construction, y’all.

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.

Crowler conundrum concluded

Finally.

Mike McKim held an empty aluminum can under a tap and pulled the handle, filling the can with Real Ale Brewery’s Helles beer. He fitted a pull tab lid on top, slotted the can into his “crowler” machine, and pushed a button. He told the story of the equipment’s origins, invented by Colorado-based brewery Oskar Blues.

Then the founder of Cuvée Coffee in Austin explained how the state of Texas took it away from him, fined him more than $30,000, kept it for months after judges told them to return it and sparked a lawsuit that cost him more than $40,000 in legal fees.

“[TABC charged us with] illegally manufacturing an illicit product,” McKim said. “Basically, brewing beer. We’re not brewing beer. We buy beer, put it on tap, and put it in a can. Who cares whether I’m putting it in this little Dixie cup or in a bottle or a can, what difference does it make? And that’s why we went to court.”

McKim’s battle with the Texas Alcoholic Beverage Commission officially drew to a close on Thursday, when he got his crowler machine back after more than a year of separation. The coffee bar sold its first crowler since 2015 on Friday. And McKim’s story has inspired two pieces of legislation this session.

[…]

Cuvée Coffee’s story became the impetus for HB 908, which allows draft beer to be sold for off-premise consumption in both crowlers and growlers. Its author, state Rep. Ramon Romero, Jr., D-Fort Worth, wrote a letter to TABC Executive Director Sherry Cook early March this year admonishing the agency for its failure to return Cuvée’s machine months after a judge ordered them to do so.

“TABC has so many other things to worry about,” Romero said. “We’ve been working with TABC to crack down on human trafficking, bars taking advantage of women, to some degree creating environments that are very dangerous for women. We’ve been working on all these things and if it was up to me, that would be what they’re focusing their attention on — not small businesses trying to innovate.”

On Monday morning, McKim testified in support of SB 813 and told the Senate Affairs Committee he had to spend $41,300 fighting the TABC over the crowler machine. Sen. Bryan Hughes, R-Mineola, said he filed the bill to give individuals and businesses the ability to sue regulatory agencies for unreasonable regulatory actions. He hopes it will deter agencies from pursuing potentially frivolous regulatory actions.

“If I’m an agency and I’m messing with a Texan, there is no downside, no risk from the agency’s standpoint,” Hughes said. “There’s nothing keeping the agency from pursuing a frivolous action. If they lose in court and appeal like they did with Mr. McKim, there’s nothing keeping them from pulling out all the stops and punishing a business owner. The idea behind SB 813 is to even things up a bit.”

See here and here for the background. This was always a ridiculous difference-without-a-distinction action by the TABC, and it’s good that they have admitted defeat. I support HB908, though I’d like to know more about SB813 before taking a side on it. The bottom line is that our beer laws and how we enforce them continue to be silly, though hopefully now slightly less silly. There’s a lot more room for a lot less silliness, if we want there to be.

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.

Shiner’s caffeinated beer

We return to an old favorite topic, caffeination of things that are normally not caffeinated.

One of Texas’ favorite beer brands has released a new product to celebrate 108 years in business.

Shiner Beer’s caffeine-laden Shiner Cold Brew Coffee Ale has just hit stores. The brew is made with Chameleon Cold Brew, another Texas-based company.

Chameleon has been making organic cold brew in Austin since 2010. The brand has exploded in the Lone Star State as cold brew increased in popularity.

[…]

Those who have tasted the new Shiner beer say it has a clean finish, lager-like taste. According to the Beer Street Journal it “drinks like a beer, as well as a hopped cold brew.”

The beer will be released in cans, bottles, and on draft. It will be a limited-time offering.

Shiner releases specialty limited-availability brews every year around this time. Lots of things have been caffeinated in recent years – potato chips, soap, Cracker Jack, even air. Caffeinated beer has been with us since at least 2004, though as that was a Budweiser product, I’ve no doubt that Shiner Cold Brew Coffee Ale will be superior. Alas, I myself am not a fan of coffee, so I’ll have to rely on third party reports to confirm that. Bottoms up and Happy Birthday, Shiner.

A win for beer

Hooray!

All you want for Christmas is a crowler to go? It probably won’t happen that quickly, but an administrative judge’s recommendation could move the state a step closer to letting bars and restaurants sell takeaway beer in the sealed, 32-ounce aluminum cans that sparked a passionate debate last year when officials cracked down on retailers who used them.

“I’m ecstatic,” said Todd Hayden, owner of Hop Scholar Ale House in the Spring area. ” … We sold a ton of beer in crowlers.”

Until last fall, that is, when Texas alcohol regulators ordered bars simply to stop using crowler-filling machines or risk losing their sales licenses or facing thousands of dollars in fines. Seven retailers, including three in the Houston area, received written warnings.

Selling beer for off-premise consumption in growlers, typically glass or stainless-steel bottles that are capped by hand, remained legal for retailers with the proper sales license. But the Texas Alcoholic Beverage Commission declared the crowler machines require a manufacturing license to operate. Only licensed brewpubs that make beer and can sell it to-go were allowed to continue using them.

Hayden and others put the machines in storage, but Cuvee Coffee of Austin challenged regulators by continuing to sell crowlers. TABC agents seized its equipment in September 2015. The company eventually sued in state District Court, but it was ordered to go through the administrative hearings process first.

Round 1 goes to Cuvee. In a decision dated last week, administrative judge John Beeler sided with the retailer on all counts and recommended that TABC return the equipment and change its rules.

See here for the background. Basically, the administrative judge agreed that crowlers are not usable in a manufacturing process and thus should not be subject to this requirement. The TABC can accept this ruling and adjust accordingly, or it can file an exception in the hope of getting the judge to change some part of his ruling. The deadline for that is December 2. It may still be awhile after that before the crowler machines come out of storage, but barring anything unusual this is a great result for Texas and everyone who drinks beer. Austin 360 and the Current have more.

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.

Chron overview of Heights dry referendum

For an issue that directly affects a few thousand people, this sure had gotten a lot of attention.

[Bill] Baldwin is part of the “Keep the Heights Dry” movement, a group of individuals urging residents who live in the dry part of the Heights to vote against the city of Houston proposition that would allow the legal sale of beer and wine for off-premise consumption.

If the proposition passes on Nov. 8, retailers like convenience and grocery stores would be able to sell beer and wine in a part of the Heights that has been dry since 1904. The change would not affect restaurants, which are able to sell alcohol by forming private clubs that their customers can join by providing their driver’s licenses.

Baldwin’s group is going up against the Houston Heights Beverage Coalition, a political action committee formed earlier this year to push the reversal of the dry law.

Largely at stake is the proposed development of a new H-E-B on a former Fiesta site at 2300 N. Shepherd.

H-E-B wants to buy the property but said it needs to be able to sell wine and beer in order for the store to be economically feasible.

“From a business proposition, if I spend $25 or $30 million building a store I also need to make sure it can earn a fair return,” said Scott McClelland, Houston division president for H-E-B.

The San Antonio-based grocer has put more than $60,000 into the coalition, according to finance reports filed with the Texas Ethics Commission.

Baldwin, who lives in the Heights but outside the dry area, said the election is not about being against H-E-B but preserving the character of the neighborhood.

His group has been urging residents of the dry area to consider the issue apart from H-E-B.

He said more service stations and convenience stores could diminish property values of the homes around them.

“This election is not about H-E-B, it’s about changing the fabric about my community,” Baldwin said.

Honestly, there’s nothing here that you couldn’t learn from reading the dueling op-eds or listening to the interviews that I did with Baldwin and Reilley. The story did remind me that there used to a a tiny HEB – it was called an “HEB Pantry store” back in the day – in the Heights that no one went to because it didn’t have much in it. This whole debate is a little nuts because people in the greater Heights area have been begging to get a real HEB like the one in Montrose in the neighborhood, and if it weren’t for this oddball quirk of history, the announcement that there would be an HEB built on the site of the old Fiesta would be greeted with handsprings and huzzahs. But because we’re held hostage to the way some people viewed the demon rum a century ago, we’re stuck with this silly debate. Everyone in America is ready for the Presidential race to be over, I’m ready for this referendum to be settled.

The dry debate

The Chron hosted a mini-debate about the vote to change the Heights dry ordinance on its Monday op-ed pages. Bill Baldwin represented the status quo, for keeping the Heights (the original Heights) dry.

With the stark reality of land use as it is today, our deed restrictions are patchy, and most properties on high-traffic streets here are not restricted at all. In a city with no zoning, other typical neighborhoods have deed restrictions where the Heights does not. Undoubtedly, the dry area has successfully kept large operators such as Walmart, Target, Sprouts, Kroger and a Whole Foods concept on the way all outside of our historic borders. Eliminate that barrier and you make way for future big-box retailers, gas stations and convenience stores, along with their parking demands and high traffic.

You don’t build a fence to keep out the good neighbors; it’s for the bad ones. In this scenario, we still consider H-E-B a good neighbor, but I am concerned about operators without the reputation of H-E-B.

We don’t know exactly what will happen if we change the dry area, but we do know this: All around the city there is concern about the changing character of neighborhoods. Like the rest of the city, the Heights is wrestling with these issues of development and identity. How do we responsibly progress, increase property values and keep a sense of identity intrinsically tied to the community? In the Heights, the dry area has in many non-obvious ways functioned toward those ends. Keeping the Heights dry means also keeping it local and residential.

Steve Reilley spoke for the pro-change faction, to amend the historic dry ordinance to allow beer and wine sales for off-premise consumption, i.e., retail sales.

We need to alter this regulation in order to welcome locally oriented businesses into the community. Rest assured, this is a grassroots effort, and is not driven by businesses wanting to sell alcohol. More than 1,700 Heights voters signed the petition requesting the measure be placed on the Nov. 8 ballot. Our effort has been criticized because of H-E-B’s involvement. H-E-B didn’t sign the petition – we did. And the Texas Constitution gives us the right to have this election because we want to preserve our neighborhood, increase consumer options, raise property values and increase walkability, as Mayor Pro Tem Ellen Cohen, the chairwoman of the Houston City Council Quality of Life Committee, recently noted that the repeal of this regulation will do.

Some have suggested that permitting the sale of beer and wine for off-premise consumption will lead to the opening of convenience stores along Heights Boulevard, negatively affecting the Heights’ character. High property costs in the area would inhibit such use. In addition, much of Heights Boulevard and most of the affected area falls within the Houston Heights East and Houston Heights South Historic Districts, which prohibits existing covered structures from being torn down and replaced with nonconforming structures, such as convenience stores. Moreover, various properties along Heights Boulevard and other parts of The Heights are subject to deed restrictions that preclude commercial use.

Some opponents to the proposition have unfortunately engaged in “scare tactics” by suggesting unrealistic harm will fall upon our neighborhood if Heights-area stores are permitted to sell beer and wine for off-premise consumption. This election has nothing to do with liquor stores, bars, strip clubs or chain restaurants. It will have no impact on restaurants that operate as private clubs to serve alcoholic beverages to patrons. Residents will not be able to sell beer, wine or liquor out of their homes. This activity is already prohibited by numerous state laws, county regulations and city ordinances.

I did interviews with both gentlemen about this – here’s Baldwin and here’s Reilley. The latter was done in June after the petitions were submitted and before there was any organized opposition, so that interview was more informational, since there were still a lot of questions about what this effort was and what it meant. Baldwin doesn’t really say anything in his piece that he didn’t say in the interview he did with me, while Reilley’s article necessarily includes some rebuttals of pro-dry talking points. If you are in the affected area and somehow haven’t yet decided which way to go on this referendum, the two opinion pieces and interviews should tell you all you need to know.

I have no idea which side will win. I won’t be surprised by either result. There’s been a lot of recent discussion of it on the Heights Kids mailing list, with a fairly even split between the factions; the few recent threads I’ve seen on Nestdoor were all started by pro-dry people. I’ve seen more pro-dry yard signs than I have seen pro-amend signs, but I’d say half of those signs are in yards that are not in the affected area. (A good bit of the discussion I’ve seen in both places has been about who actually gets to vote on this issue.) I’m pretty sure there will continue to be a lot of chatter about this after the election, whichever way it goes.

Interview with Bill Baldwin of Keep Heights Dry

heightsdry1

As you know, there will be a referendum on the ballot for a very limited electorate this year, to alter the existing ordinance that enforces a dry zone in the historic Houston Heights to allow the sale of beer and wine for off-premise consumption – for retailers, not for restaurants and bars, in other words. This referendum, formally known as City of Houston Proposition 1, was placed on the ballot by a petition drive led by the Houston Heights Beverage Coalition, which in turn was backed by HEB, which has announced its intention to open a store in the old Fiesta location on North Shepherd at 24th if this referendum passes. I did an interview with Steve Reilley of the HHBC back in June when petitions were still being circulated to clarify some questions about this. At the time, I noted that I was unaware of any organized opposition to this effort.

Well, formal opposition to this effort does exist, and it’s called Keep The Heights Dry. I’ve seen a few of their yard signs around the neighborhood in recent weeks. Their argument as you can see on that Facebook page is one part preservationist and one part neighborhood protection, and last week they reached out to me to see about doing an interview. Bill Baldwin, who has a real estate office on Heights Blvd at 16th Street, is one of the leaders of this opposition effort and the person I spoke to about it. Here’s the conversation:

Interviews and Q&As from the primaries are on my 2016 Election page. I will eventually get around to updating it to include links to fall interviews.

HEB confirms interest in Heights location

As rumored.

Residents have seen and heard speculation and rumors for months, wondering what the fate would be regarding H-E-B’s potential Heights move. Well wait no more.

After the rumor mill ran wild following the No-Dry Vote petition spearheaded by H-E-B and the Houston Heights Beverage Coalition earlier this year, president of the company’s Houston region Scott McClelland confirmed to The Leader in an interview that the company plans to open its new location at the site of the old Fiesta in the Heights, should voters elect to make that area “wet” in November. The official site announcement took place at the old Fiesta location on 23rd Street and North Shepherd Thursday morning.

A permanent move into the Heights remains predicated on the No Dry Vote passing, and it appears H-E-B as well as the Coalition are confident in its future success, as evidenced by Thursday morning’s proceedings.

Advocates such as Heights resident, local attorney and chair of the coalition Steve Reilley told The Leader in September that opening an H-E-B within the Heights would provide a boon for the economy along with the diversity in shopping options.

“There are a lot of people who would like to have a big grocery store within walking distance because they don’t have transportation or would like to have a job they can walk to in the Heights,” he said.

McClelland’s recent inboxes seem to say as much.

“Over the last five years I’ve probably gotten more requests for a store in the Heights than anywhere else in Houston,” he said.

See here for all previous blogging on this topic. The former Fiesta site has been talked about as a potential HEB ever since the original store was sold and demolished. As noted, this is all predicated on the dry law revision being passed. KUHF addresses that.

In August, the City Council voted to place a referendum on the ballot to lift the ban on the sale of beer and wine for off-premise consumption.

Steve Reilley leads the Houston Heights Beverage Coalition, which collected more than 1,700 signatures on a petition to overturn the ban. He, together with city council members and representatives from the retail industry, kicked off the official campaign for a yes vote.

They’ll have to convince at least half of the estimated 10,500 voters who live here.

Considering there is no organized opposition, this sounds like an easy task but Reilley says they’re not taking it for granted.

“In Houston/Harris County, a November ballot in a presidential year is very, very, very long,” he says. “And so this one is literally going to be the last thing, the bottom of the ballot on that November ballot, so we have to get the word out.”

He says there’s also some misinformation about what the ordinance would do. It doesn’t repeal the original law that established the ban but merely allows for beer and wine to be sold in stores.

I don’t know about organized opposition, but I have seen one yard sign advocating a No vote, so someone is working against it. I make the referendum a favorite to pass, but it’s unusual enough – and this is a weird enough year – that I wouldn’t feel too confident about that. The Chron, Swamplot, and the Houston Business Journal have more.

Have we reached peak beer in Texas?

Maybe not, but we are surely testing the limits of the market.

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Owners of Eureka Heights Brewing Co. signed up 40 bars and restaurants to sell their beer during their first three weeks in business. The taproom was drawing such crowds that they quickly expanded hours. Saturday afternoons are now quite a scene, especially when a tour bus drops off a clutch of beer explorers.

They made opening a brewery look so easy, it’s perhaps no wonder others continue to jump in.

In late June, the Chronicle published a comprehensive list of 36 breweries operating between Galveston and Bryan-College Station, including 12 in Houston proper. In the three months since, five more breweries have opened within the city limits. Two were hosting opening events Friday night alone.

It’s a startling number, even given the surging interest in locally made beer.

“We often do see little bursts of activity as people get excited and open at the same time,” Brewers Association chief economist Bart Watson said Friday.

Brock Wagner, who founded Saint Arnold Brewing Co. 22 years ago, called it “the type of coincidence that is likely to occur when you have so many breweries in planning.” He cautioned that the new brewers may find it tougher to find shelf space in stores or room on a tap wall for their draught products.

“I think we may be at peak brewery opening,” he said, adding that it may still be two to three years before a shakeout begins and some breweries close. “I’ve been predicting a slowdown in brewery opening for a while and been proved wrong. I think we are at that point.”

Jason Armstrong, vice president, sales and distribution, and co-owner of Buffalo Bayou Brewing, sees room for more breweries. But he agreed it’s an open question.

“How many people can you fit in the boat?” he said. “I don’t think we know that yet.”

I confess I’ve lost track of the microbreweries in the Houston area. There are a few brands I buy – mostly but not exclusively Saint Arnold – and a bunch that I’ve never tried. I hope they all make it, and I hope they take an ever-increasing share of the market from the big conglomerates, but the odds are that in five or ten years’ time, the total number of micrbreweries will be smaller than it is today. In the meantime, I need to do some touring and sampling. I’ve been missing out.

Microbreweries win their distribution rights lawsuit

Excellent news.

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A Texas law that prohibits brewers from selling territorial rights to distribute their beer is unconstitutional, a judge ruled Thursday, serving up a major victory to beer companies seeking to expand their presence in stores, bars and restaurants throughout the state.

The decision says the government has no compelling interest in prohibiting brewers from seeking cash compensation when negotiating a contract with distributors, who have almost exclusive authority to handle sales between producers and retailers.

“This law, it was written by beer distributors to enrich big beer distributors and that is not a legitimate state interest,” said Matt Miller, senior attorney and head of the Austin office of the Institute for Justice, which litigated the case on behalf of Texas craft brewers Live Oak, Revolver and Peticolas.

The law, passed three years ago, allows brewers and distributors to negotiate for things like equipment and marketing efforts, but not direct compensation. That denies brewers who have worked to build up their business the ability to “capture the value of their brand” once they are large enough to require a distributor, said Charles Vallhonrat, executive director of the Texas Craft Brewers Guild.

A cash infusion from a distribution contract also would allow smaller breweries to expand operations, hire new employees and build up marketing teams to increase sales, Vallhonrat said.

Thursday’s ruling by state District Judge Karin Crump in Austin came after both the brewers and the Texas Alcoholic Beverage Commission sought summary judgments in the lawsuit. After considering depositions from both sides, Crump declared the law violates state constitutional protection for economic liberty.

[…]

Plaintiff Chip McElroy, founder of Live Oak Brewing Co. in Austin and one of the law’s most vocal critics, called it “unjust … unconstitutional … just plain wrong.”

“It took our property and gave it to them for free,” McElroy said Thursday.

Arif Panju, another Institute for Justice attorney in the case, said the ruling applies to out-of-state breweries as well. Miller said it protects all entrepreneurs looking to build up their businesses.

Miller said the ruling will help breweries going forward but does not address those who struck distribution deals while the 2013 law was in effect.

The Texas Alcoholic Beverage Commission has 30 days to file an appeal. A spokesman said agency lawyers are in touch with the Texas Attorney General’s Office and likely will appeal.

See here and here for the background, and here for a copy of the ruling. I hope the TABC will reconsider its inclination to appeal. This law serves no one’s interests except those of the Wholesale Beer Distributors of Texas. The state should not be spending its own resources pursuing a reversal of this ruling. As noted elsewhere in this story, if the original bill that forbade the microbreweries from selling their distribution rights had been about any other commodity, it would have been laughed out of the Capitol. Surely we have better things to do than this.

More from Austin 360:

Brewers and their fans might be rejoicing their victory right now, but they’re still holding their breaths over two other beer-related cases in Texas courts.

One case involves an issue that brewers unsuccessfully pushed for in the 2013 legislative session. As a result, Dallas’ Deep Ellum Brewing sued the Texas Alcoholic Beverage Commission last year to try and get breweries the ability to sell beer to-go from their facilities — something that wineries and distilleries in Texas are both able to do. (Operators of brewpubs, which sell food in addition to beer, also can sell their products to the public.)

Also, Cuvee Coffee decided to go to battle with the TABC over the issue of whether retailers can sell crowlers, which the TABC argues are one-use cans, rather than aluminum growlers, that only manufacturers of beer can sell.

Both cases are expected to be resolved within the next couple of weeks.

See here for more on the Deep Ellum lawsuit, and here for more on Cuvee Coffee. Let’s hope for a clean sweep. I’ll keep my eyes open for further news. The DMN has more.

Microbrewery lawsuit heard in court

I can’t wait to see how this turns out.

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Just how much is it worth for that Velvet Hammer or other local craft brew to make it to your favorite bar or convenience store?

That’s one of several key questions that came before a state district court Monday, as a group of craft brewers — including Peticolas Brewing of Dallas and Revolver Brewing of Granbury — challenged a contentious component of the state’s arcane alcohol regulations.

Namely, the craft brewers want to overturn a 2013 law that says they cannot accept financial compensation for their distribution rights.

In Texas and in many other states, the alcohol industry operates under a three-tier system: producers, distributors and retailers. That arrangement, which dates to the end of Prohibition, seeks to eliminate potential problems by keeping each operation independent from the others.

[…]

In 2013, the Legislature passed several new alcohol laws, many involving the burgeoning craft beer scene. Though multiple bills helped the upstarts, particularly brew pubs, there’s little doubt that the distribution rights piece boosted that middle tier of the system.

Consider that at least one brewery — Live Oak Brewing in Austin — sold its distribution rights for the Houston area for $250,000 before the law went into effect. Now, that would be impossible.

Some craft brewers, if they meet certain criteria, can use what’s called self-distribution as a work-around. But the restrictions that come along with that practice can make it difficult for some brewers to expand their reach, particularly across the state.

Adding to the frustration of the craft brewers is that a distributor, once it has the territorial rights to a certain brewery, can then sell those rights to another distributor. So what can’t be measured, by law, in dollars on the front end carries significant value on the back end.

“There’s just no rational basis for the law,” Michael Peticolas, owner of his eponymous brewery in the Design District, said in an interview after Monday’s hearing.

See here for some background. The lawsuit was filed in 2014, and its root is in SB639, which passed during the 2013 session at the same time as the other bills that allowed microbreweries to sell their wares at their home locations. The Statesman adds on:

Karen Watkins, a lawyer from the office of Texas Attorney General Ken Paxton, defended the law on behalf of the Texas Alcoholic Beverage Commission and said the state must not weaken the current regulatory system.

In Texas, the sales of beer and liquor are governed by post-Prohibition rules that maintain strict boundaries between manufacturers, distributors and retailers. In the three-tier system, makers of beer, wine and spirits create their products, distributors sell them, and bars and other retailers peddle the beverages to the public.

“The government’s interest is in preserving the integrity to the three tier system,” Watkins said. She said the state intends to prevent any overlap between the manufacturing tier and the distributing tier.

Watkins said the law helps the Texas Alcoholic Beverage Commission, for example, quickly remove tainted products from store shelves, if needed.

Arguing the case for the brewers, Matt Miller, an attorney for the Arlington, Va.-based Institute for Justice, said the case isn’t about the three tier system, but about fairness.

“It enriches distributors at the expense of craft brewers,” Miller said.

Miller said the law prevents many brewers from selling their products in some markets, which has the effect of providing less choice to consumers and fewer opportunities to expand for craft brewers that choose not to give away distribution rights.

As you know, I think the three-tier system is an archaic holdout from the Prohibition days that do nothing to enhance competition. Quite the reverse, in fact. Attorney Watkins went so far as to imply that success by the plaintiffs in this case would lead to organized crime, which thankfully the judge pushed back on. I’m rooting for the plaintiffs, as I’m sure you could guess. The judge says she expects to make a ruling in the next few weeks.

Heights alcohol rule change petitions verified

The item will be on the ballot, pending Council approval.

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City Secretary Anna Russell confirmed that the Houston Heights Beverage Coalition gathered 1,759 valid signatures for its petition submitted last month, 248 more than required by law.

The Houston City Council is now slated Wednesday to formally call the election for Nov. 8, as required by state law.

The ban predates Prohibition. It first went into effect in 1912 and was kept in place when the Heights was annexed into Houston in 1918.

If the ban is lifted, residents would be allowed to buy alcohol at grocery and convenience stores. The change would not affect alcohol sales at restaurants.

See here, here, and here for some background, and here for my interview with Steve Reilley, who led the petition effort for the Houston Heights Beverage Coalition. I should note that the petitions specified “off-premise beer and wine sales”, so hard liquor would still not be available for purchase within this zone. As is always the case with dry areas, there are two liquor stores right outside the zone – they’ve been there for as long as I can remember – so no big deal.

The ballot proposition has now been approved by City Council, so it will officially be there. Only people who live in the historic dry area will have this item on their ballot, so administering it ought to be interesting. There is definitely some opposition to this, and as it is an affluent area I expect a fair amount of money to be spent by both sides between now and November. I consider the change effort to be the favorite to win, but anything can happen. The Press has more.

Interview with Steve Reilley

By now you are aware of the effort to alter the historic regulations that keep the part of town that was once the independent city of the Houston Heights dry. The dry designation, in the area you see in the embedded picture – see here if you’d like a more modern context – was part of the annexation agreement between the Houston Heights and Houston. It could only be overturned by an election. Well, that election appears to be slated for this November, as a group called the Houston Heights Beverage Coalition says it has collected enough signatures from relevant residents to put this on the November ballot. The issue has already attracted a great deal of attention, and no small amount of misinformation, from residents and folks nearby, some who want to keep things as they are and some who can’t wait to have an HEB built nearby. To try to clarify things and get some answers to my own questions about the process, I sat down for an interview with Steve Reilley, who is heading the effort for the HHBC. Reilley is an attorney and a resident of the affected area, and he was a Democratic candidate for civil court judge in 2010. Here’s what we talked about:

As I said, there is definitely some opposition to this, as well as some enthusiastic support, but as yet I am not aware of an organized effort to oppose the ballot measure. When I do learn of such a group or organization, I will reach out to them for an interview as well. What are your thoughts on this?

A brief summary of the effort to make the Heights less dry

The Heights Life provides a fact sheet:

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  • The petition is backed by HEB, who hired a law firm to handle the drive. Some of the canvassers, who are paid and may or may not be your neighbors or Heights residents, may not know about HEB, only the firm that hired them. Either way, it’s all about HEB.
  • The petition itself does NOT actually change anything about the existing law. The petition puts the issue on the ballot to be voted on in November.
  • You can only sign the petition and participate in the subsequent vote if you live in the dry zone.
  • The petition/future vote are for *off premise sales of beer and wine only.* This means you can buy beer or wine at the store and take it elsewhere. You will not be able to drink at the store.
  • The petition and vote will NOT ALLOW hard liquor sales.
  • Restaurants and bars will still have to get a club license to serve on-premise beer/wine/alcohol in their establishment.

There’s more, so go read the rest. The Houston Heights Beverage Coalition now has a Facebook page if you’re into that sort of thing. Note that my embedded graphic is an inaccurate representation of what’s at issue here, but I don’t feel like finding something else. As The Heights Life notes, there are already plans for an HEB on Washington Avenue, which is outside the dry zone. A Heights-based HEB would surely be in the spot of the now-shuttered Fiesta on Shepherd, just inside the northern boundary of the zone. This only happens if the vote to alter the off-premise sales restriction passes.

As Campos notes, there’s been a lot of discussion on Heights Kids and Nextdoor about the petition effort and what it means, not all of it (in my opinion) very accurate. I’m sure that is what prompted this post by THL, to help clear things up. I’m going to do my part for that shortly, as I plan to interview Steve Reilley of the Houston Heights Beverage Coalition PAC; there are a bunch of process-related questions I’d like answered, among other things. The HHBC has reportedly collected a sufficient number of petition signatures, so assuming they are verified, some number of voters will have another item on which to vote this November. If an opposition group should form for this, I’ll do my best to interview a representative from that group as well. In the meantime, this is what we’ve got.