Small Brewers Pushing to Tap Into the Action

If you want to sample Scott Metzger’s Old Bat Rastard brew, you will have to travel to San Antonio, sit down at his pub, Freetail Brewing Company, and order a frothy glass from the tap or ask for a half-gallon growler to go.

Pub owners like Metzger would love to sell their brews in retail stores, bars and restaurants, but state law prohibits it. So he and other owners have formed Texas Beer Freedom, a nonprofit lobbying organization, to push for legislation that would allow brewpubs to get their beer out beyond the bar.

But the small brewers have to overcome some opponents with big names and deep pockets: the powerful beer distribution lobby.

Metzger, who is also an economics lecturer at the University of Texas at San Antonio, said that while the locally brewed beer business is booming nationally, it is lagging in Texas, where the laws governing  distribution are restrictive. As a result, he said, the state is losing out on tax revenue.

“We and a lot of other brewpubs in the state are beginning to get a lot of nationwide notoriety for our beers,” Metzger said. “But we simply can’t get outside of our doors, literally.”

Under state law, brewpubs can make and sell their beers only on site; they are not allowed to  distribute their products themselves or through a separate wholesaler. Only breweries that do not sell their own products on site may distribute their beer through wholesalers. House Bill 660, filed by Representative Mike Villarreal, Democrat of San Antonio, would give them the green light to increase production, sell to beer distributors and sell directly to stores and restaurants if they produce 10,000 barrels of beer a year — the equivalent of 20,000 kegs — or less.

But major beer distributors do not want to open those spigots. Their lobbyists argue that allowing brewpubs to sell their own wares would destroy the regulatory system in Texas that has operated, effectively and profitably, since the end of Prohibition. Rick Donley, president of the Beer Alliance of Texas, which lobbies for companies that distribute major-brand beer and some craft brews, said the three-tiered system — which regulates the production, distribution and retail sales of beer separately — made the beer business easier to regulate and tax, and keeps any one business from creating a monopoly.

Because brewpubs are not currently regulated in the same way as distributors, Donley said he worries that their products could be shipped to dry counties or to minors. “This regulatory system has worked well since Prohibition,” Donley said. “Why anybody wants to disrupt it is a question I can never quite get an answer to.”

It has worked well for the major beer producers. The top five brands in Texas, according to the state Alcoholic Beverage Commission, are Bud Light, Miller Lite, Budweiser, Coors Light and Natural Light.

The brewpub supporters point that the legislation would make brewpubs that produce up to 10,000 barrels a year and sell directly to restaurants and stores subject to the same requirements as wholesalers and distributors  

“At the end of the day, it’s just about they don’t want increased competition and how that affects their personal wealth,” Metzger said.

Wholesale Beer Distributors of Texas, the other major special interest group, declined to comment for this story. Together, the beer distribution groups have given lawmakers and Gov. Rick Perry approximately $2.5 million in campaign contributions since 2001, according to state campaign finance records.

Top 10 Texas Beer Lobby Donations

Villarreal said he hoped the brewers’ nonprofit group would generate enough support to force the big-name distributors and lawmakers to compromise. “My proposal is a start of the conversation,” he said.

Texas Beer Freedom is relying on social networking and public rallies to garner support for the measure. “We know that we are definitely the underdog, big-time underdog,” Metzger said. “But that doesn’t mean we are not going to fight.”

The Wholesale Beer Distributors of Texas is a $2,500 corporate supporter of the Tribune.