Hopping mad about Texas beer regulations
Let’s not be naïve: There’s no such thing as a free market, especially for craft brewers in Texas.
Before you blame Big Government, aka the lawmakers and regulators that usually interfere with free markets in unprofitable ways, you might want to look at the Big Beer Distributor lobby first.
Just look at Brent Deckard of Künstler Brewing — close to where I live in San Antonio. He’s been running his brewpub for a little more than a year and already hit some weird restrictions.
I enjoy talking to new entrepreneurs like Deckard because they are full of fresh outrage about restrictions on their ability to make a living.
Künstler is licensed as a brewpub, which means customers may drink beer brewed on premises. Customers may also purchase a limited amount of beer “to go,” for home consumption. That brewpub-style business has only been legal since 2013.
Künstler may not, however, sell any other brewer’s beer on premises. That’s illegal. It can, however, sell wine or cider made elsewhere, which makes no particular sense, especially when compared with the beer restriction. Deckard could pay a fee to a beer distributor to sell other brewers’ beers on his premises, even though the beer remained at his brewpub the whole time.
Why should we care about this labyrinth of brewpub laws? Only that in a highly unfree market, consumers always get fewer choices, at higher prices. And entrepreneurs have fewer ways to serve the public.
Now, there are obviously solid reasons to regulate alcohol sales and distribution. Few people would advocate a libertarian free-for-all in the beer market, in which my 8-year old could fill up her growler with an IPA for her birthday party. Anyway. As Charles Vallhonrat, executive director of the Texas Craft Brewers Guild, explained to me, post-Prohibition regulations in Texas (and most states, for that matter) have strongly split up the three roles of making, distributing and selling beer. Businesses that want to engage in more than one of those three activities have traditionally been severely restricted in part for safety reasons and in part to protect one kind of business from pushing around the other kind in an uncompetitive manner.
The growth of craft brewing over the past two decades has represented a challenge to this traditional system, as smalltime makers of beer have sought to sell directly to their customers in a variety of ways, cutting out the distribution step.
As Vallhonrat tells it, craft beer makers aren’t looking to upturn the system. They want to loosen restrictions.
Oddly, not everyone cares about beer, or the minutiae of beer laws, so let me try to make my view of this fight applicable to other businesses and industries.
The central issue that a brewpub or beer manufacturer faces is not one of big government versus free markets.
Because again, free markets don’t exist. I see the central tension as an economic incumbent versus challenger.
This same issue — incumbent versus challenger — drove the Uber/ Lyft versus taxi drivers fight that played out in cities worldwide the past four years.
Upstarts — such as craft beer makers — have to work a lot harder to make the case that regulations should crack open a bit more to allow them to meet customer demand. That’s a hard fight.