News Column

Texas Micro-breweries May Get Boost in Business

March 15, 2013

Adam Russell, Tyler Morning Telegraph, Texas


A legislative victory may be brewing for an emerging industry in Texas.

Four bills designed to reduce restrictions on Texas micro-brewery beers and allow them a bigger slice of a $20 billion beer market were approved unanimously this week by the Senate Committee on Business and Commerce.

Proponents and legislators believe the legislation will be a boon for a small but growing industry.

Sen. Kevin Eltife, R-Tyler, the bills' author, said passage of the bills would be a win-win for the state and entrepreneurs poised to build businesses around the craft of making beer.

If micro-brews' place in the market follows the same trajectory as Texas wineries, which gained similar provisions in 2001, Eltife said economic impact studies show Texas breweries could create more than 55,000 jobs and $5.6 billion in commerce.

Similar legislation languished in House and Senate committees last session. They were kept at bay by lobby groups working to keep Texas' three-tier alcohol system cornered for established breweries, distributors and retailers.

The bills, Senate Bills 515, 516, 517 and 518, would effectively give micro-brews more access to distributors, allow them to self-distribute quantities of beer and sell their product for consumption on site.

Eltife said all stakeholders, even those who previously opposed the legislation, have agreed to support the bills all the way to the governor's desk.

Scott Metzger, founder of Freetail Brewing Co. and an adjunct economics professor at The University of Texas at San Antonio, said the economic impact could be much higher because 20 times as much beer than wine is consumed in Texas each year.

Metzger, 33, brews about 1,000 barrels of between 90 and 100 crafted beers at his brew-pub restaurant and said the legislation represents better access to the market and more room for success. He said the bills would allow established breweries opportunity to invest in capacity and grow and give other entrepreneurs the incentive to start.

"There are a lot of people who have contemplated getting into the industry," he said. "If the legislation passes, I expect a flurry of activity."

Texas has room to grow, according to a study drafted by Metzger and presented by the Texas Craft Brewers Guild. With about 60 breweries, Texas ranks among the bottom 10 states for microbreweries per capita, but the market has grown. Microbreweries produced 46 percent more beer from 2010 to 2011.

Eltife said potential jobs, capital investment and growth to state and local tax bases are pushing the reform.

"These are small businesses and entrepreneurs in an industry with enormous potential," he said.

While microbreweries produce less than 1 percent of the beer consumed in Texas, they employ more than 50 percent of the state's brewery jobs. Respondents to a survey within the study said they plan to invest $29 million to expand their businesses during the next five years to add more than 185,000 barrels of capacity.

Sen. Leticia Van de Putte, D-San Antonio, who brought the various stakeholders to the table to hammer out differences between proponents and opposition during the past year, said getting the legislation to this point was a "Texas effort."

She applauded Eltife, Sen. John Corona, R-Dallas, the chairman of the Business and Commerce Committee and all the stakeholders, from microbreweries, major brewers to wholesalers and distributors, who spent hundreds of hours to find agreement within convoluted alcohol laws, some of which date back to Prohibition.

The legislation represents more local choices for consumers and positive commercial growth for the state's economy, she said. Some Texas brewers may only want the capacity to produce beers for their restaurants or as a hobby, she said, but others want to take award winning brews global.

"We wanted to provide the framework for that," she said. "Consumers like buying local products and participating in the craft, and we're so excited about where the legislation is in the process."

Source: (c)2013 Tyler Morning Telegraph (Tyler, Texas) Distributed by MCT Information Services

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