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Bar owners still mad at Abbott

Sep 24th, 2020
by Charles Kuffner.
1 comment

Can’t blame them, but the situation is complicated.

As Gov. Greg Abbott outlined his latest reopening plan this week, bar owner Greg Barrineau watched in disbelief. Abbott, who announced that Texas restaurants could expand dine-in service to 75% capacity, said bars must remain closed.

“Some bars and their associations have offered some very helpful ideas,” Abbott said of reopening, “and we will continue to work with them on that process.”

But Barrineau, who has laid off his 12 staff members and suffered hundreds of thousands of dollars in losses at Drink Texas, a bar with locations in San Antonio and Boerne, said that assertion of collaboration is “insanity — he doesn’t care about small businesses.”

Michael Klein, the head of Texas Bar and Nightclub Alliance, which represents thousands of bars, said that Abbott’s statement about working together was “incorrect,” carefully choosing his words. The TBNA laid out a six-point plan to reopen in August, but Klein said the governor, whom he referred to strictly as “anti-business Abbott,” has not responded to the plan.

“We’ve never heard back from them,” Klein said. “We believe that he is disingenuous.”

Abbott’s office did not respond to requests for comment.

While restaurant owners applauded Abbott’s move to allow them to increase operations, Klein said Thursday’s ruling was “completely unacceptable” for many bars and other facilities where alcohol sales make up more than half of the revenue. It could leave 30% of Texas bars and 39% of distilleries permanently closed within six months, industry leaders said.

[…]

Spread from conventional bars and nightclubs has been widely documented throughout the U.S., and infectious disease experts caution going inside establishments that don’t follow social distancing protocols.

Kristin Mondy, chief of the infectious disease division in the University of Texas at Austin’s medical school, said there is increased risk in spreading the virus if strangers mingle in a tight, closed space, especially as drinking could cause bar customers to loosen their inhibitions.

Klein said the industry’s plan would reduce those issues by complying with Centers for Disease Control and Prevention requirements.

Some of the requirements in TBNA’s plan include ensuring all patrons are seated at their own tables, barring dance floors and mingling among groups, requiring face masks for all servers and customers when not at their tables, and conducting temperature checks upon entry. Mondy said these procedures could help as long as mask-wearing and social distancing are enforced.

[…]

Cord Switzer, who has helped run Fredericksburg Winery for almost 25 years with his family, said he has been able to technically and legally become a food server — but no one that comes is actually eating the food. That’s not why they go to a winery, he said.

“It makes no sense to me,” Switzer said. “We have never been interested in being in the food service business. We have no intent of doing that in the future, but it was our only choice.”

Switzer started wine tastings on Saturday for the first time in two months and hopes to begin recouping his losses after making 30% of last year’s revenue. But he doesn’t understand the governor’s categorization, and industry advocates share Switzer’s confusion.

“Texas winery owners continue to be perplexed by Governor Abbott’s steadfast refusal to recognize that the lion’s share of Texas alcohol manufacturer’s tasting rooms have little, if anything, in common with bars and nightclubs,” said Patrick Whitehead, the president of the Texas Wine and Grape Growers Association, in an email. “Governor Abbott’s arbitrary, and frankly unfair, act of lumping our tasting rooms into the category of bars is like a surgeon operating with a chainsaw rather [than] a scalpel.”

Switzer’s money troubles are not unique; nearly half of distilleries surveyed by the Texas Whiskey Association have experienced revenue losses greater than 60%. Spence Whelan, the head of the association, which represents distilleries across Texas, said continued restrictions could be disastrous for the industry, which normally relies on a big fourth quarter in holiday sales to stay afloat. This fall, with little or no visitors, that could be wiped out. Under Texas law, whiskey distilleries cannot ship or deliver whiskey directly to customers, nor can they sell more than two bottles of whiskey per person.

At the very least, Whelan said, those rules should be relaxed. Many places don’t want to open yet anyway, and there are other ways to bring in money. He said the industry has sent more than 15,000 letters to the governor’s office asking to waive those restrictions and has received no response.

Let’s acknowledge that bars are a high-risk environment for COVID-19, and the reopening of bars in May was a significant contributor to the subsequent outbreaks that swept the state in June and July. We should also acknowledge that there’s evidence that the reopening of restaurants, even at lower capacities, is also a risk factor in spreading COVID-19. The bar owners’ complaint – and wineries’, and distilleries’, and craft breweries’ – is that Abbott has been particularly rigid about how these risks are categorized, and has been unresponsive to any input that would allow these entities to operate in a lower-risk fashion.

I have a lot of sympathy for these complaints. Some bars have been able to reopen by creative interpretation of the 51% rule, by incorporating to-go service, and by a recent rule change that lets them have food trucks on their premises. But this doesn’t work for every bar, it imposes extra costs on them, and it doesn’t change the fundamental nature of their business. The only good thing that may come out of it is the expanded allowance for to-go service, and maybe if we’re very lucky a broader rethinking of our antiquated regulatory scheme for alcohol. I don’t know how effective the risk-mitigation strategies that have been proposed by the various industry groups would be, but we could study them and try the ones that comply with known best practices. We could surely let the places that have ample outdoor space like wineries and craft breweries with beer gardens take advantage of those spaces (to some extent we already are permitting this), and we could make allowances for those that have large and well-ventilated indoor spaces where social distancing would work. And, you know, Abbott and Dan Patrick could put a little pressure on the two Republican Senators to support a relief bill in Congress that included funds for bars and other places that rely heavily on alcohol sales (such as music halls) that just can’t be allowed to reopen right now. Abbott has done none of this, and as noted in the story has been repeatedly unwilling to engage in any discussion about it.

So this is both a legitimate set of concerns by members of a significant sector of the Texas economy, and a real opportunity for Democrats going forward. Dems don’t need to pander or reverse course on their properly-held principles about minimizing COVID risk. They just need to be willing to consider the various risk-mitigation strategies that have been proposed, and to continue to push for a response from Congress that truly addresses the broad economic pain that much of the country is still experiencing. Good policy is so often good politics, and the opportunity to do both here is enormous.

It’s still hard out here on bars and restaurants

Aug 21st, 2020
by Charles Kuffner.
4 comments

I continue to worry about our once-thriving hospitality industry.

Hundreds of Texas bars and restaurants are scrambling to change how they operate, maneuvering through loopholes that will allow them to reopen after being closed by Gov. Greg Abbott’s latest shutdown targeting bars.

Abbott has shut bars down twice since the coronavirus pandemic emerged in Texas. The first time bars were swept up in a total lockdown of statewide businesses. But the second time, on June 26, Abbott singled bars out while allowing virtually every other kind of business in Texas to stay open.

But other operations such as restaurants that sell a lot of booze, wineries and breweries were ensnared in the same order and also forced to close because alcohol sales exceeded 51% of total revenue, meaning they were classified as bars.

“Generally everyone has a common sense understanding: ‘What is a bar? And what is a restaurant?’ I think that 51% rule is so broad that it actually picks up or encompasses businesses that we would normally think of as really being restaurants,” said State Rep. John Wray, R-Waxahachie, one of more than 65 lawmakers who signed a letter asking Abbott to update his order’s definition of a restaurant.

Wray gave the example of a burger restaurant, where a patron might buy a burger and two beers. Oftentimes, the beer will cost more than the food, but that doesn’t make the restaurant a bar, he said.

Emily Williams Knight, Texas Restaurant Association president, estimates that about 1,500 restaurants ranging from steak houses to coffee shops that sell wine were “inadvertently” forced to close when Abbott shut down bars, translating to about 35,000 lost jobs in the state.

The Texas Alcoholic Beverage Commission responded to outcry from the service industry with new guidance in a July 30 notice allowing businesses to either demonstrate that they recently had less than 51% alcohol sales or use alcohol sales projections and apply for a Food and Beverage Certificate, documentation that allows them to reopen as a restaurant.

The certificate workaround requires the business to have a permanent kitchen. It allows bars and restaurants to use projected sales numbers instead of requiring past sales to determine if alcohol sales exceed food sales.

The TABC received more than 600 requests from existing businesses for Food and Beverage Certificates since Abbott’s order took place and granted about 300, according to commission spokesperson Chris Porter. Almost 90 businesses have also requested to update their alcohol sales numbers in an effort to reopen.

The Texas restaurant industry is already struggling, with Knight projecting that up to 30% of restaurants in the state could go out of business.

For those forced to shut down due to the bar order, it can be a death sentence and business owners see these changes as their last hope.

[…]

Breweries also found themselves forced to shut down by Abbott’s order, with two-thirds of Texas craft brewery owners predicting that their businesses could close permanently by the end of the year under the current closures, according to a July survey by the Texas Craft Brewers Guild.

Hopsquad Brewing Co., an Austin brewery, reopened as a restaurant using a Food and Beverage Certificate with an onsite food truck serving as its kitchen, General Manager Greg Henny said.

He was lucky, because the brewery already had a food truck on site, Henry said. But he thinks breweries and wineries should have their own classification separate from bars, because they operate differently.

Henny said the guidance from the TABC has been confusing and harmful to breweries. To help other businesses survive the pandemic, the agency allowed “retail and manufacturing businesses” to serve and sell alcohol in a patio or outdoor area that wasn’t part of its original designated premises, which some brewery owners took as being able to reopen.

However, the TABC later released a clarification saying that businesses with more than 51% alcohol sales were not eligible.

“The circumstances are constantly changing as a result of which way the winds are blowing with [the TABC],” he said. “It makes us feel frustrated. We’re fighting tooth and nail just to stay open, and we’ve shown time and time again that we can operate safely,” he said.

State Rep. Matt Krause, R-Fort Worth, and Texas Legislative Tourism Caucus chairman led the efforts behind the letter sent to Abbott asking for an updated restaurant definition.

“You’ve got a lot of these establishments — these restaurants — that are kind of in limbo just because of how much alcohol they sell,” he said. “Restaurants that have already been decimated by the first initial shutdowns with the pandemic [and] by some people’s reluctance to want to come in and eat.”

I’ve beaten this drum before, and I continue to believe that to-go food and drink rules should be as liberal as possible, the 51% rule should be greatly relaxed, all avenues for outdoor seating should be explored, craft breweries and wineries and distilleries should get a break. But let’s be real, the problem won’t be truly solved until we get the damn virus under control, and that means taking mask wearing and social distancing seriously. It would be nice if we had a functional, non-evil federal government that tried to do something to help, but that ain’t happening till January, and we don’t have that kind of time. It would also be nice to get a rescue bill for bars and restaurants passed – there are some bipartisan proposals out there – but, well, see the previous point. We have to hold on for now.

And lord knows, that ain’t easy.

Bars that offer food service are scraping by with booze to-go operations. Their counterparts without kitchens, bound by state rules, can do little but watch their coffers wither.

“We’re all looking at our bank accounts like you would at the life bar in a video game,” said Michael Neff, owner of the Cottonmouth Club downtown. “All of us are just watching that life bar everyday trying to predict how long we have until it disappears.”

The industry had barely got its legs back following the limited reopening that went into effect on May 22 when on June 26 Gov. Greg Abbott ordered the state’s roughly 5,500 bars closed indefinitely. Bar owners, feeling they have been targeted, have decried what they describe as a lack of support from leaders as they square off with the coronavirus. Some have gone as far as filing suit against Abbott seeking to have the closure order overturned.

“Financially it’s just the worst you can imagine,” said Scott Repass, owner of Poison Girl in Montrose.

To be clear, Repass said, he agrees that people should not be drinking in bars right now. But he said there’s little difference between what would be happening at bars if they were open and what continues to happen at cafes and restaurants.

“If you shut down a bar, people are just going to go to a restaurant with a bar,” he said. “There’s just no logic to it, that that is safer than a bar operating at 25 percent capacity. We feel like we were scapegoated.”

I don’t agree with that. Clearly, many more people can be packed into a bar than a restaurant. Again, I’m up for drinks to go and outdoor seating, and maybe bars at 25% capacity with social distancing once we’ve got the numbers down some more, but the bars needed to be closed. Maybe if we’d stayed closed a little longer we wouldn’t have had to close them again, but it was right to close them. All that said, I do agree with this:

Lindsay Rae Burleson, who opened Two Headed Dog with her business partner before the pandemic hit, has been working since March at a Houston distillery making hand sanitizer to make ends meet.

The bar’s fate is uncertain, she said. Government-backed loans have run out, and she decided not to renew her insurance, which would require a substantial downpayment on Aug. 1.

Losing the bar for good would strap her with a debt so large, “it doesn’t even feel like a real number.”

“I worked nine years to get this bar,” the longtime bartender said. “I put everything I had in. I haven’t got a cent of salary, yet.”

Artisan bars and neighborhood ice boxes are part of Houston’s fabric, she said. But now the city is barreling toward a reality in which only the chains may survive.

“That’s not a city I want to live in,” she said. “That’s not a city I want to be a tourist at.”

We’ve gotta beat the virus. We can’t have our nice things until we do. Tell the Senate to pass that $3 trillion bill the House passed back in May to ease people’s financial burden until then, and then work on a bill specifically to help bars and restaurants. It’s a whole lot easier if we let it be.

Wineries and distilleries

Jul 19th, 2020
by Charles Kuffner.
5 comments

I’m happy to keep beating this drum, but I’d really rather not have to.

The owners and patrons of Ironroot Republic Distillery in Denison hardly consider the business to be a bar in the traditional sense.

There’s no loud music or dancing. The doors closed at 5:30 p.m. most nights before the pandemic. On Saturdays, they closed at 3 p.m. Most of its business came from out-of-towners booking tours who wanted to sip the “World’s Best Bourbon,” as designated by the World Whiskies Awards.

Nonetheless, Ironroot Republic Distillery was shut down late last month with the rest of the bars in the state under Gov. Greg Abbott’s latest executive order. Meanwhile, other businesses like restaurants, theme parks and bowling alleys are still open with limited occupancy. Abbott’s order required any business that gets 51% or more of its revenue from alcohol sales to close.

“We’re tourism industry businesses, we’re not bars. So they shouldn’t treat us like bars,” said Dan Garrison, owner of another tasting room, Garrison Brothers Distillery in Hye, a community in the Texas Hill Country.

Distillery, winery and even some restaurant owners with high alcohol sales say they are unfairly being caught in the crossfire of the statewide bar shutdown, despite running starkly different operations from those Abbott warned against when he issued his latest executive order.

“We’re all struggling to survive right now,” Garrison said. “And we’re about to lose a heck of a growing industry if the governor doesn’t do something.”

[…]

When Ironroot Republic Distillery shut down, most of the people who booked tours could no longer purchase bottles unless they were local to the area, owner Robert Likarish said. Delivering or mailing liquor to consumers isn’t allowed unless there’s a restaurant attached and the business has a mixed beverage permit.

Because it’s in a rural area, it’s been a challenge to get traffic to the distillery for curbside pickup. And even if people do come, state law only allows distilleries to sell two bottles of liquor to a customer within 30 days.

“Essentially, all the things that we’d normally do to help sell and push movement of our product are gone,” Likarish said.

Spencer Whelan, executive director of the Texas Whiskey Association, said the governor’s executive orders didn’t take into account the business models of distilleries and similar businesses.

“It was just kind of generally a wide-swath brush applied to everybody in the alcohol manufacturing industry if they had any kind of retail onsite consumption,” Whelan said.

Whelan is calling for the two-bottle limit to be waived and Sunday sales be allowed. But more than anything, he is urging Abbott to allow age-verified delivery — so that distillers can sell their products across the state.

[…]

Wineries, which often have spacious outdoor vineyards and patios where patrons can spread out, say they’re also being unfairly targeted.

“We were highly impacted by the shutdown and the pandemic just because we were forced to basically close our tasting room, which is where 90% of our sales are generated,” Lost Draw Cellars owner Andrew Sides said.

After missing out on sales in April and May — the months that typically perform best — the Fredericksburg winery reopened at the beginning of June with new rules: All tastings were moved outside, and only one group of people who came together was allowed at a time.

But then, along with bars, the winery was forced to close.

Sides said he wished that Abbott’s order had been more specific — his permit is different from bars’ permits, and people are largely taking the wine offsite to consume at home. It’s frustrating for him when other similar businesses — like a local salsa maker who allows onsite testing — can stay open.

“The whole intent for most tasting rooms and wineries is for people to come and try wine, buy it and leave,” he said.

As you know, I agree with all of this, even more so for outdoor tasting rooms. Let the places that serve food continue to serve food for pickup and delivery, and even for limited outside seating if they have it. None of that is particularly risky, and it will help a business community that really needs it. And of course, I’m all for dismantling our ridiculous system of regulations on beer and liquor. (Turns out that ridiculous anti-competitive beer distribution laws aren’t just for Texas, too.) Let the distilleries sell more bottles, and let them all sell on Sunday. It seems like some of this ought to be an easy Yes for Abbott, so I’m kind of puzzled why he’s not taken any action to help these folks. Whatever the reason, I hope they get some help before it’s too late.

Give the bars a break

Jul 13th, 2020
by Charles Kuffner.
4 comments

I’m OK with this.

The Texas Restaurant Association has asked Gov. Greg Abbott to revise the definitions of “bar” in his recent order closing drinking establishments in response to a spike in COVID-19 cases.

In a letter to the governor, the TRA argues that if businesses now classified as bars but equipped with permanent kitchen facilities are allowed to reopen as restaurants, 1,500 Texas businesses could resume operation and put up to 35,000 people back to work.

Under current state rules, any establishment that makes 51% of its revenue from alcohol sales is classified as a bar, even if it serves food. The TRA’s proposed change to that definition could clear the reopening of San Antonio businesses such as Southtown fixture The Friendly Spot and brewpub Weathered Souls.

“The definition of ‘bars’ in Gov. Abbott’s executive order has inadvertently captured a lot of restaurants, requiring them to close their dining rooms, even though they were following all of the statewide health protocols for restaurants,” the TRA said in a statement accompanying the letter.

“All restaurants should be allowed to serve the public under the same health and safety standards.”

Lots of bars serve food, and as far as I’m concerned, every bar that has a kitchen ought to be able to prepare meals to go for the duration and beyond. Let them sell mixed drinks to go, too. All that qualifies as low-risk activity and should be enabled and encouraged as a sensible way to let people work without putting their health in significant jeopardy. I’m less interested in letting them open their dining rooms at this time, especially now when we’re talking about maybe having to shut down again, but for to go service they should be considered as restaurants.

You may as well mark today’s date on your calendar, because it will be a long time before I say these words again: I agree with Sid Miller.

In a July 1 letter, Miller asked Gov. Greg Abbott to amend the recent order that closed all Texas bars so that wineries and tasting rooms can reopen immediately.

Currently, wineries and tasting rooms are lumped into the same business category as bars. That’s because more than 51% of their revenue comes from the sale of alcoholic beverages.

“I am sure you will agree tasting rooms are not bars, nor do they present the same reasons for concern related to excessive alcohol intake or inability to social distance as found in a bar,” Miller writes.

The letter noted that nearly 95% of all Texas wine is sold in tasting rooms, and without that revenue, Texas winemakers may not have the ability to purchase grapes for future Hill Country vintages.

“When these wineries suffer, we lose more than just wine,” the letter continued. “The closure of these testing rooms has a damaging downstream effect on the grape producers, wineries and surrounding communities…”

I’m a bit more measured on this one, since tasting rooms are mostly going to be inside. Outdoor tasting areas should be allowed with social distancing, and indoor tasting rooms should be allowed to operate with the same basic constraints as restaurants, which is to say with a max 50% capacity right now. I believe wineries can sell their wares to go for off-premises consumption, in the way that breweries now can, but if there are any restrictions on this they should be lifted, just as all of our anachronistic and anti-consumer laws regulating beer, wine, and liquor ought to be reformed or repealed. The point here is that both of these proposals are low risk and good for both the businesses and the consumers, and we should do them. Your move, Governor.

UPDATE: Case in point.

What makes a Texas wine?

Mar 19th, 2017
by Charles Kuffner.
1 comment

Texas grapes, obviously. Or maybe not so obviously.

Rep. Jason Isaac

Chris Brundrett sat in a barn surrounded by barrels of wine he helped curate and swirled a glass of water in his hand, perhaps imagining it was something else.

Brundrett, accompanied by others from the state’s wine industry, drove home his pitch: “If we can just pump out wine from California and slap a picture of the Alamo or a longhorn on it and sell it,” he said, should wineries be able to put a “made in Texas” label on it?

A co-owner and winemaker at William Chris Vineyards between Fredericksburg and Johnson City, Brundrett was explaining why he backed House Bill 1514 by state Rep. Jason Isaac, R-Dripping Springs, which would require that wines with a Texas label be made only with Texas-grown grapes.

Under federal law, wine can have an appellation of origin from a state if a minimum 75 percent of its grapes are grown in that state. The other 25 percent can come from anywhere.

“I believe having something labeled as Texas should be from Texas,” Isaac told the Tribune, adding that his bill would encourage more Texas grape production.

Last year Texas produced about 3.8 million gallons of wine, according to the Texas Alcoholic Beverage Commission, and the state had more than 400 active permits to bottle, produce and sell wine. A separate study in 2015 found the wine industry contributed more than $2 billion to the state’s economy.

Grape growers and vineyard owners are scattered on the labeling issue. Paul Bonarrigo, co-owner of Messina Hof Winery, the state’s third-largest wine producer in 2016, said he was opposed to the measure, and the Texas Wine and Grape Growers Association said they don’t back Isaac’s bill, either.

[…]

Back at the Capitol, Isaac said that while 100 percent Texas wine was the goal, some in the industry contend that it might be too challenging to use only Texas grapes by September when the bill would go into effect if passed.

Isaac said he would look into offering an amended version of HB 1514 that would phase in the change, with benchmarks at 80 or 90 percent before requiring 100 percent Texas grapes. Isaac also said his bill would allow the Texas Department of Agriculture to allow exceptions to the threshold if severe weather or drought damaged state grape crops.

I don’t have any particular objection to this bill, though I think the federal 75/25 standard is perfectly adequate. Surely there’s some value in giving the wineries a bit of slack in a bad year. As long as there is a standard that everyone can accept and it is fairly enforced, I’m okay with whatever.

Legalize moonshining

May 4th, 2014
by Charles Kuffner.
1 comment

You can brew your own beer at home, and you can ferment your own wine at home, but if you try to distill your own spirits at home, you’re asking for trouble from the rev’nooers.

The movement to legalize marijuana dominates headlines these days, but another group is laboring in relative obscurity to legalize its chosen intoxicant: homemade liquor.

The newly formed Hobby Distillers Association, based in Tarrant County, aims to change a federal law that prevents anyone from distilling spirits in the home — even if you drink it all yourself and don’t sell a drop.

“A lot of people don’t realize this is illegal,” said Rick Morris, owner of Brewhaus, a Keller company that manufactures and distributes small-scale stills and related supplies to make liquor. “It’s an eye-opener for them.”

Morris, the driving force behind the new association, has scraped up the funds to hire a Washington, D.C., lobbying firm to convince Congress that hobby distilling should be put on the same legal basis as brewing beer and making wine at home.

“The beer and wine hobbyists are a little more organized,” said Paul Kanitra, president of lobbyit.com, which now represents the Hobby Distillers Association. “The hobby distillers are finally saying enough is enough.”

Federal law allows a hobbyist to brew up to 100 gallons of beer a year without getting a license or paying taxes. The same holds true for wine makers.

But distilling any amount of spirits — whiskey, gin, vodka, absinthe — could bring legal problems with the IRS and its subsidiary agency, the Alcohol and Tobacco Tax and Trade Bureau.

Federal regulators say it’s a matter of public health and safety: It’s easy, they say, to inadvertently produce homemade liquor adulterated with poisonous chemicals or start a fire with open flames used to heat a still.

Home distillers say those fears are overblown — that their hobby is safe and harms no one.

Kanitra said he and his lobby team hope to find a member of thee U.S. House or Senate to sponsor a bill and get it passed before the end of the year.

“We have to educate members of Congress, and once we do that, they will see there is no reason to treat hobby distillers so differently,” Kanitra said.

It never ceases to amaze me how many archaic Prohibition-era laws are still on the books, being enforced. I see no reason why distilling at home should be treated any differently than home brewing or home fermenting. If there are safety concerns, then put regulations on the equipment. At least craft distillers have more freedom to operate in Texas thanks to a series of bills passed last year that were sponsored by Senator and Lt. Governor candidate Leticia Van de Putte. This one’s a matter for Congress, and they’re too busy repealing Obamacare and not passing immigration reform to pay attention to something like this. Nevertheless, it would be nice if at least one member of Congress agreed to sponsor a bill to legalize home distilling. Who wants to lead on this issue?

Amazon wine

Oct 20th, 2012
by Charles Kuffner.
Comments are off for this post

You may soon be able to order wine from Amazon.com, depending on where you live.

Amazon.com Inc. AMZN -0.88% is planning an online marketplace for wine sales directly to consumers, said executives for several California wineries, marking the Seattle Web giant’s second foray into the business in three years.

Amazon hosted a workshop [last week] at a resort in Napa, Calif., and invited members of the Napa Valley Vintners association, said Terry Hall, a spokesman for the group. He said about 100 wineries attended the event.

At the event, Amazon said the marketplace would begin in the coming weeks and the online retailer will charge wineries a 15% commission of the sale price, as well as a monthly fee of about $40, according to people familiar with the workshop.

[…]

In 2009, Amazon pulled back from an effort to sell and ship wine after its partner, New Vine Logistics, suspended operations amid financial troubles. This latest effort would spare Amazon the cost and difficulty of shipping fragile and heavy wine bottles by passing that responsibility on to the vineyards themselves.

Wine sales online are challenging due to a patchwork of state-by-state rules that limit which companies can sell alcoholic beverages. And shippers must ensure that recipients signing for packages are at least 21-years-old, the legal limit.

The question you may be asking now is “Will I be able to order wine through Amazon to be shipped to Texas?” And the answer is…I’m not sure. Last year, the TABC cracked down on out of state resellers who were shipping to Texas without a state sales tax permit. The TABC addresses the question of direct shipping of wine to Texas consumers, and one of the things they say is “Under current state law, wholesalers / distributors are not authorized to ship wine directly to consumers in Texas”. However, out of state wineries may ship to Texas if they obtain a direct shipper’s permit, pay sales and excise taxes, and ship to a TABC permitted carrier. So I guess the question is whether Amazon would be considered a wholesaler/distributor in this scenario, or if the fact that the wineries themselves are doing the shipping opens a loophole for this to be permitted. I sense a legislative opportunity here, or failing that, future litigation. Anyone want to be a test case?

Brewers win one in court

Dec 24th, 2011
by Charles Kuffner.
5 comments

From CultureMap:

A small but significant victory was had for craft beermakers and drinkers Monday when a federal judge ruled (partially) in favor of Austin’s Jester King Brewery in a lawsuit against the Texas Alcoholic Beverage Commission.

Jester King filed a motion for summary judgement in Federal court in October over what it deemed to be violations of both its First and 14th Amendment rights.

Its First Amendment right to free speech, Jester King argued (along with two co-plaintiffs — a distribution company and an Austin restaurant) was violated by the TABC’s oft-criticized demand that any beer stronger than 4 percent be labeled as ale and anything with less than 4 percent alcohol by weight be labeled beer. The celebrated craft brewery argued that misusing technical terms as shorthand for alcoholic strength ignored hundreds of years of beer-making tradition and, in effect, misrepresented its brews and brewing processes to the public.

Jester King also claimed its 14th Amendment right to equal protection is obstructed by Texas’ three-tier system, which mandates that breweries (which produce beer on-site and distribute it to consumers) may not sell their wares on site while brewpubs (which produce and sell on-site) may not distribute it to consumers.

Here’s some background and analysis of the ruling, along with the wit and wisdom of Judge Sam Sparks, courtesy of Freetail’s Brewed And Never Battered blog. Briefly, this is what the ruling means:

To summarize, the ruling has the following effects:

TABC cannot prohibit you from telling customers or advertising where they can buy your products
TABC cannot require you to label your products by their definition of “beer” and “ale”
TABC cannot prohibit you from advertising the strength of your products by prohibiting words like “strong”, “prewar strength”, “full strength”, etc

There’s more to it than that, so go read all the links. The bits about how the TABC was essentially unable to justify its regulations was fascinating, and I hope inspiring to the next Legislature. That will be necessary, because the ruling did not strike down the regulations that forbid breweries to sell their wares directly to visitors even though wineries can do so. Keep pestering your State Rep and State Senator about this, because in the end it’s their job to make this happen. Plaintiff Jester King, I Love Beer, and Beer, TX have more.

Put that wine bottle down and slowly back away

Oct 31st, 2011
by Charles Kuffner.
3 comments

Don’t buy wine over the Internet, kids. The State of Texas says so.

State officials have teamed up with FedEx, UPS and other shippers to ferret out wines being sent to Texas by websites that don’t have proper permits.

That has prompted Wine.com and several other resellers to restrict sales to consumers in the Lone Star State.

Wine.com has 30,000 active customers statewide, CEO Rich Bergsund told the American-Statesman on Thursday. Those customers were notified via email this month that the company had halted shipments of wine to Texas.

Other sites not currently shipping wine to Texas include TheWineBuyer.com, WineBid.com, WineExpress.com and WineLibrary.com.

A law blocking the deliveries isn’t new, but the Texas Alcoholic Beverage Commission has ratcheted up enforcement efforts this year.

“Anybody who is going to sell to Texans has to have a permit,” TABC spokeswoman Carolyn Beck said.

And, right now, Beck said, there’s no law enabling out-of-state resellers to obtain permits allowing them to sell wine here. “They haven’t been authorized by the Legislature,” she said.

Nasty little conundrum there, isn’t it? You need to get a permit to sell wine in Texas, but there’s no law that allows an out-of-state retailer to get such a permit. Thus are crackdowns like this born. There is one potential workaround for businesses like Wine.com, but it’s at best a partial solution:

In its message to customers, Wine.com indicated it was working to set up a warehouse in Houston in hopes of securing a state permit. A lease could be signed soon, Bergsund said.

“We are hoping the state government will see this as a win-win,” the company wrote in its email, “because we will bring valuable jobs into Texas, but there are no guarantees.”

A question-and-answer section on Wine.com indicates the company has used a similar approach in other states with similar restrictions.

“We’ve opened a network of Wine.com warehouses in a number of states, giving us a local presence in those states. This enables us to legally ship wine to our customers in those states while also reducing the shipping time to get you your wine. Unfortunately, in some states not even that will suffice, so keep those letters and emails flowing to your state legislators!”

Beck said Wine.com would only be able to ship to residents of Houston, Harris County and areas within a two-mile radius of Houston’s city limits if its proposed warehouse materializes.

Given that Texas wineries can sell and ship to any customers within Texas, one presumes that Wine.com would either have to open a storefront or start growing grapes here to qualify.

Unlike many industries, online wine sales are a minimal share of the total – about one percent, according to the story, though the potential for growth is there. It’s never going to be a dominant force, but that’s not stopping state regulators here and elsewhere from intervening. It’s hard to see this as anything but an anti-competitive move, one that like the byzantine restrictions we have on selling beer in this state will do nothing for the consumers. From my perspective, as long as the Internet retailers pay the same taxes as the brick and mortar folks, it’s all good. And speaking of such things, let me give the last word to the Austin Contrarian, from whom I saw this story:

Thankfully, Texas booksellers didn’t have the political clout wielded by wine merchants and wholesalers when Amazon was getting off the ground back in the 1990s, else the State would have banned buying books off the internet, too.

Good thing there isn’t a state agency equivalent to the TABC for books.

More cork recycling

Jul 10th, 2011
by Charles Kuffner.
1 comment

I’m always interested in recycling stories.

The [Oregon-based nonprofit Cork Forest Conservation Alliance], whose donors include vineyards, want to remind oenophiles that cork products are made from the bark of the cork tree, which regenerates and is harvested every nine years, director Patrick Spencer said.

With no severe shortage of corks, he said, there is no reason to eschew cork corks for plastic corks.

The corks will eventually be taken to Whole Foods, a partner of the alliance. From there they’re trucked to Missouri, where they’re recycled into cork flooring and other products for sale. The company that recycles and sells the material is an alliance donor, Spencer said.

Globally, 13 billion wine corks are produced each year, the majority in Portugal, Spencer said. The alliance has recycled 35 tons of cork since 2008, mostly through 290 participating members in the United States, he said.

You can read more about the alliance and Cork ReHarvest at the Whole Foods blog. All Whole Foods markets are drop off locations for your used wine corks, which was not yet the case at the time I last blogged about this. And if you happen to buy wine that has a synthetic cork, that’s basically plastic and should be recycled as well.

Compromise on microbrew bills

Mar 22nd, 2011
by Charles Kuffner.
2 comments

As Brewed and Never Battered noted, HB660 and HB602 were scheduled for a public hearing in committee today. I’m delighted to say that it looks like there was progress achieved on them.

Rep. Mike Villarreal, D-San Antonio, laid out HB660 before the House Licensing and Administrative Procedures Committee today. The measure, in its original form, would’ve allowed brewpubs — restaurants that brew their own beer — to distribute directly to other bars, restaurants and stores. But after a compromise with the Beer Alliance of Texas, the bill would only allow brewpups to sell their bottled wares via a beer distributor.

Villarreal told the committee that brewpubs are already manufacturing beer, and that Texas’ regulatory system is stunting their growth. Brewpubs in other states are allowed to sell to distributors, meaning Texas is losing out on what could be a growing business, Villarreal said.

“If it is putting our playing field at a built-in disadvantage to our brewpubs, versus out-of-state brewpubs, then it needs to change,” said Villarreal.

But opponents of the bill, including the Wholesale Beer Distributors of Texas, say allowing brewpubs to sell to distributors would break down the three-tiered system that regulates the production, distribution and retail sales of beer separately — and which has been around since Prohibition. The system is meant to make it easier to regulate and tax beer sales and keep any one company from gaining a monopoly.

They suggest a round-about alternative: HB602, which would allow breweries to charge admission for tours and include up to two six-packs of beers to give to tourists at the end of the tour. Keith Strama, who represents the Beer Distributors, told the committee if HB602 passes, brewpubs could change their licenses to become manufactures of beer, so that they could sell to distributors, sell during tours, and open a restaurant on the premises.

Rick Donley, president of the Beer Alliance of Texas, told the committee that he is a staunch supporter of the three-tier system, but that after working with Villarreal and the brewpub owners, a compromise was reached. Originally, the bill would have allowed brewpubs to sell a limited amount of their product directly to stores and other restaurants and bars, bypassing the distributors. The amended bill makes the distributors the middle man.

Scott Metzger, a brewpub owner and executive director of Texas Beer Freedom, said he’s pleased with the compromise. Being able to sell his beer to a distributor will help him grow his business, Metzger told the committee, but would also help grow the state’s economy and its tax revenue. Metzger, who is also an economics professor at the University of Texas at San Antonio, told the committee the bill has the potential to create $680 million a year in economic activity, 6800 new jobs at brewpubs and $57 million in new tax revenue per year.

Personally, I’d prefer to see the three-tier system thrown onto the ash heap of history, but if Scott Metzger is happy with this compromise, then so am I. If what they say about HB602 is true and it gets passed, it’ll be a huge step forward. I’m genuinely optimistic about their chances now. Kudos to Metzger, Rep. Villarreal, Rep. Jessica Farrar (the author of HB602), and everyone else involved in brokering this deal. Now let’s get this bill passed so we can all enjoy the benefits of it.

Elsewhere in alcohol-related news, two other bills moved along, though neither are bills I’d been following.

The first will require liquor stores to begin reporting the final sales destination of booze they sell — and could boost state revenues as much as $25.8 million — was approved this morning by the Texas Senate.

State Sen. Kevin Eltife, R-Tyler, the author, said that under current law, the stores do not have to report the final destination of liquor sales like they do for beer, wine and malt liquor.

“This changes the reports filed with the Comptroller, and is expected to increase tax revenue to the state,” Eltife said, noting that the improved tracking of sales is expected to improve auditing and tax collection.

The second bill, by Sen. Craig Estes, R-Wichita Falls, will increase the limit for Texas winery off-premise tasting room sales from 35,000 gallons to 50,000 gallons. More wine sold will mean more revenues for the state, officials said.

Estes said that the increase is expected to allow the wine industry to continue growing at its current rate. Between 2007 and 2009, the economic impact of the Texas wine industry grew from $1.35 billion to $1.7 billion annually.

The bills in question are SB576 and SB411. With the news about HB602, I’d say it’s been a good day for Texas beer and wine lovers.

The last bill of alcohol-related interest is SB595, which is a bill to allow Sunday liquor sales, and on which there has been no further action. There’s still time in the session for it, but as Yogi Berra once said, it gets late early out there. I’m not nearly as optimistic about this bill’s chances.

Cork recycling

Jul 2nd, 2009
by Charles Kuffner.
1 comment

Isiah Carey asks “Have you ever heard of cork recycling?”

I’ve heard of bottle recycling, plastic recycling, and even computer recycling but never cork recycling. Apparently, some Houston area liquor stores are on a campaign to recycle corks from wine bottles. In fact, one store in The Woodlands will donate 2 cents for every cork turned in by its customers. That money will be used for cancer research and care. The store I encountered has plans to match the 2 cents for every cork turned in.

As a matter of fact, I have heard of cork recycling. What I hadn’t heard of was where you could do it locally. Unfortunately, Carey’s post doesn’t really answer the question. And even if it did, it wouldn’t really be economic for me to drive up to the Woodlands to drop off some wine corks. Maybe as single stream recycling gets introduced to more neighborhoods in Houston, wine corks can be added to the list of accepted items, if they aren’t already.

Blue laws

Mar 19th, 2009
by Charles Kuffner.
1 comment

Ever wanted to buy some booze on a Sunday? Maybe soon you’ll be able to.

Most Texans are familiar with the Blue Laws.

Put into effect decades ago, they prevent the sale of hard liquor on Sundays, among other things.

“There is certainly an inconvenience there, no doubt about it,” Spec’s Liquor Warehouse customer Bud Hall said.

And it’s inconvenient even for customers wanting to buy beer or wine. The same laws make it illegal to sell those items before noon on Sundays.

“If we are having a barbecue on a Sunday or something like that, and it is before noon, we have to sit there and wait,” Spec’s customer Scott Moody said.

Now, a bill filed in the Texas Legislature is looking to repeal those restrictions for good.

There’s no information given about said bill or its author in the story, so I’m not sure what its number is, or whether there may be more than one such bill. The closest thing I could find is HB863 by Rep. Robert Roland Gutierrez (D, San Antonio), which would allow for liquor sales on Sundays between noon and 6 PM; it doesn’t mention anything about beer or wine. That doesn’t quite fit the description in this story, but it’s all I could find.

But that’s not good news for Spec’s owner John Rydman.

“In the 2,500 or 2,600 package stores that there are all over the state of Texas are family people. We don’t want to necessarily work another day. It’s not good for my employees. They need a day off,” Rydman said.

It would also add more overhead to the store’s bottom line, Rydman said.

With the economic downturn, state lawmakers are looking for different ways to generate revenue. Selling booze on Sundays is just one of their ideas.

“I think this is a good source of revenue without having to increase taxes or cut valuable state programs,” District 143 State Rep. Ana Hernandez said.

Hernandez said Sunday liquor purchases could generate upwards of $5-8 million for the state.

Rydman disagrees.

He said his sales wouldn’t go up. Instead, he believes they’d just be spread out over seven days instead of six.

“Those who filed the bills are still convinced there is extra money somewhere. They just think we are crazy—that we people in business don’t know what we’re talking about,” Rydman said.

I support repealing the blue laws because I think they’re a relic of a bygone past that doesn’t really serve any purpose today. I think there would be a modest increase in state revenue from such a change; in context, five to eight million bucks is pretty modest and is probably in the neighborhood. It also likely would spread existing sales around more, but that sounds like a convenience customers have wanted. I appreciate Rydman’s concern about his employees and his bottom line, but I feel confident he can make it work. Spec’s notes that its hours of 10 AM to 9 PM Monday through Saturday are “The maximum allowed by law”, which suggests to me they’d do more – certainly that their customers would want them to do more – if they could. So whether it’s HB863 or some other bill I was unable to locate that’s the vehicle for this, I support the effort to extend the allowable hours for the sale of alcoholic beverages.

UPDATE: Roland Gutierrez, not Robert. My apologies.