They fought the law and the law.....

This is the latest installment on Saint Arnold's mission to change Texas Alcohol Code. Last night owner and CEO held a Teleconference and asked certain bloggers to attend. I was invited, however due to the time difference and the fact that I can't dial 1-888 numbers from Germany I was unable to attend. However, I was able to secure some notes from the conference from one of the participants in the conference, Saint Arnold's own Evan.
The first part of the post covers the change in language that Brock is fighting for:

To the Texas Alcoholic Beverage Code, Chapter 12. Brewer's Permit, add in Sec. 12.05 the following:

Such a brewer may also sell ale and malt liquor to ultimate consumers for consumption on the brewery premises or in unbroken packages for off-premises consumption in an amount not to exceed, together with the annual sales of beer to the ultimate consumer by the holder of a manufacturer's license acting under the authority of Section 62.12 of this code at the same premises, 5,000 barrels annually;

and

To the Texas Alcoholic Beverage Code, Chapter 62. Manufacturer's License add in Sec. 62.12 (a) the following:

Such a manufacturer may also sell beer to ultimate consumers for consumption on the manufacturer's premises or in unbroken packages for off-premises consumption in an amount not to exceed, together with the annual sales of ale and malt liquor to the ultimate consumer by the holder of a brewer's permit acting under the authority of Section 12.05 of this code at the same premises, 5,000 barrels annually.

The next part are the notes from the Teleconference that gives some more details into the above wording:

1. SA History

Brock opened by talking about Saint Arnold, and how it was founded 12.5 years ago. It is now the oldest microbrewery in Texas, because 14 out of 19 have failed. I believe he said it's older than any brew pub as well. He then talked a little bit between the difference in a brewery license and a brewpub license.

2. Brewery license

Breweries right now can only sell to distributors. They can never sell directly to customers, however breweries under 75K barrels/year can sell to retailers as well (known as the Shiner law, because Shiner is the one who pushed it through the legislature way back when). However, this doesn't have a very large effect on their business.

3. What the legislation is that we're pushing for (will send under separate cover)

Breweries under 75K barrels/year can sell up to 5K barrels per year for on-premises consumption [sell a pint in the brewery] or for off-premises consumption [a 6 pack of a keg].

The 75K/year is based on the Shiner law, while the 5K per year is based on the brew pub license. So both these figures have precedents.

Brock noted that just Annheuser Busch brewed 14 million barrels last year, while Saint Arnold (the largest microbrewer in the state) will brew 14 thousand. In fact if you add the 5 microbrewers together (Rahr, Independence, Live Oak, Real Ale, SA), and they all did 5K/yr directly to retailers (frankly, all the breweries together are unlikely to do 5K barrels/year cumulative in the short term). Even if the 5 microbrewers were all to sell 5K directly to consumers, it would be less than .1% of the entire beer market in the state.

4. Wineries can do what we want to do.

Because the Texas legislature has recognized that wineries (all of whom are pretty much micro-wineries) in Texas needed commonsense beverage laws, HB2593 in 2003 allowed similar changes for the wine industry.

5. This change will help microbreweries in Texas immensely by helping them compete against non-Texas microbrewers.

* Used an example of a mid-Atlantic microbrewery: for years, their beach-area brewpub subsidized their unprofitable out-of-state distribution network. Eventually their distribution became profitable, but essentially Texas microbrewers are competing against microbrewers that have more favorable laws.

* Essentially, for microbreweries, it will allow them to sell a 6 pack to people after the Saturday tour (which draws about 250 people each week). It will allow them to sell pints at events at the brewery.

* Most of all, it will allow them to sell kegs. This is huge, because people call the brewery all the time asking to buy a keg. The distributor generally only carries Amber. Thus, it's difficult to get St. Arnold's other beers on tap for parties.

Brock emphasized that these small changes will have an enormous impact in the economics of opening and running a brewery.

It's a win-win:

* Distributors benefit (microbrews are better profit, and they will have more microbrews to distribute)

* Microbrewers benefit (profit margin is higher when they sell it themself. It helps make brewers profitable). They can compete on a level playing field against non-Texas microbrews.

* Most of all, consumers benefit by having more choices. Texas beer-lovers get to drink Texas microbrews.

* Will allows microbrewers to buy more equipment, create more jobs, and even generate a little more tax revenue.

As for who won? Saint Arnolds or the Law? Stay tuned.......