in Houston, Texas
Anheuser-Busch InBev roars against craft breweries bill in Texas legislature
Wednesday, May 11, 2011, 02:47PM CST
By Mark Lisheron
Budweiser

Because it is “only” about beer and not regularly taken too seriously, citizens sometimes deny themselves the exquisite pleasure of watching money and power manipulate politics in the state Legislature.

Take a little bill, HB 602 by Jessica Farrar, D-Houston, which passed unanimously in the House in late April. The bill would allow small craft breweries in Texas to sell token amounts of their beer in their breweries in the same way Texas wineries have for years been allowed to sell a bottle or two of wine to visitors after a tour.

What’s the difference, you might ask. Why would an emissary of the largest brewing company in the world take time out of an undoubtedly busy schedule to come before a state Senate committee, as reported today by the Houston Chronicle, to voice his objection to a few breweries selling in a year what would amount to a infinitesimal fraction of one day’s production?

Mark Bordas, a representative with Anheuser-Busch InBev in Austin, told the committee Tuesday that the bill discriminates against his company because it is tailored to breweries producing fewer than 75,000 barrels per year.

It would seem, as Bordas contended, that AB InBev should have just as much a right as the little guys to let a few six packs of Budweiser and Bud Light leave with tourists at their Texas plants.

But here is where it gets delicious. Small brewers were encouraged to add a brewery output stipulation to the bill by the Wholesale Beer Distributors of Texas. Ostensibly, as Keith Strama, an attorney for the suds lobby, told the committee, “The bill was designed to promote local breweries as they gain market share.”

More importantly to the lobby, however, the stipulation would deny large breweries sales of any of their product directly to customers. Nothing since the repeal of Prohibition in 1933 has been more dear to the wholesalers than their nearly absolute control of the flow of alcohol through them from producer to retailer.

Since that time, no one has benefited more in this so-called three-tier system established by Texas law in 1935 than the major breweries. For generations distributors catered to their biggest and best customers as small regional breweries went out of business and the giants consolidated.

The Belgian conglomerate InBev’s purchase of the nation’s biggest brewer, Anheuser Busch, in 2008 gave the new company nearly a  20 percent share of the world’s beer sales. Last year, AB InBev produced 339,945,117 31-gallon barrels of beer worldwide. Anheuser Busch’s share of that production, 100,939,289 barrels, represented almost half of all the beer sold in America.

By comparison, St. Arnold Brewing Co. in Houston, the state’s leading small producer, turned out 31,445 barrels of beer.

Why, then, you might reasonably query, would the global leader in brewing squander time fighting over legislative chump change? The answer isn’t in St. Arnold’s volume, but in its 22 percent increase in production in 2010 from the year before.

Once an annoyance to the big brewers and wholesalers, craft brewing is now a legitimate force in the market. From a low mark of 80 breweries in 1983 there were 1,753 in America in 2010.

For the past 25 years, craft brewing has been the only segment of the market to grow, while the sales and production among the giants has slowly and steadily declined. Craft brewing grew to nearly 10 million barrels in 2010, still a fraction of Anheuser Busch’s production alone but an 11 percent increase from a 2009 that had seen growth of more than 7 percent from the year before.

In 2010, AB InBev’s sales were down 2.1 percent in the U.S., and the production volumes were down 13.1 percent in Russia, 4.9 percent in western Europe and 2.4 percent in China.

Never one to take competition of any kind lightly, Anheuser Busch was not likely to sit still while the Texas Legislature gave even a tiny advantage like limited on-site beer sales to someone else.

Bordas told the committee AB InBev had at one time supported HB 602 but was unaware the bill had been amended to keep companies of its size out.

His statement suggests that the Wholesale Beer Distributors helped the craft brewers amend the bill without telling the company with which they worked to defeat nearly identical bills in past sessions.

You are free to take AB InBev and the distributors at their words. But as we speculated at the time: “The unanimous vote approving HB 602 by Rep. Jessica Farrar, D-Houston, either shows how far the House has come on the issue or that the Wholesale Beer Distributors of Texas are saving their considerable wealth and lobbying expertise for the Senate.”
 
***
Contact Mark Lisheron at 512-299-2318 or mark@texaswatchdog.org.

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Comments
Inconceivable
Wednesday, 05/11/2011 - 04:02PM

Oh... I get it, the legislature is about serving businesses and not about giving it's citizens a choice.

Beer Goddess
Wednesday, 05/11/2011 - 04:40PM

Screw the giants and their crappy beer!! Let the craft breweries arise!! Huzzah!!

jasonrubik
Wednesday, 05/11/2011 - 04:48PM

It is only through ignorance that consumers continue to buy the cheap swill that is mass-produced lager in this country. Give the little guys a chance to show Americans and the world what real beer is supposed to taste like! By doing so, the ignorant zombies will awaken to the wonderful world of full flavored handmade beers. Either that, or they will continue to be cheap with themselves in the beverage dept, just as they are in the food dept as well.... ie. fast food.. yuck! Why do they do it? They fear change... they think they can't afford it. Those are all bad excuses. Get over it you people (the Budweiser lovers)... that crap sucks, don't you realize it?!?!?!

Beer Man
Wednesday, 05/11/2011 - 05:02PM

Sadly, I was on the Budweiser bus for about 15 years until a buddy of mine introduced me to some home brew, then some local breweries in Austin. I haven't looked back since. While I'm not really a fan of IPA's, I haven't found a craft beer that I didn't like. Giving the little guys a chance is what's really needed to root out the bad taste that the giants produce...that, and word of mouth.

Pants Tramble
Wednesday, 05/11/2011 - 06:06PM

I really really hope this passes.

ed
Thursday, 05/12/2011 - 07:04AM

It's all about the big guys wanting to squeeze the little guys. They are not content with a 50% shareof market. Most domestic beer is swill that is mass produced. I've been on t he craft brew bandwagon for years now and would rather drink H2O than most domestic swills. Hope this bill passes the Senate.

Chris
Thursday, 05/12/2011 - 10:51AM

Just curious, are there any macro breweries located in Texas? The bill would allow sales of beer at the brewery, so if the macro brewery exemption weren't in place and the bill passed, could I actually get some of SABMiller's or A-B InBev's fine product from a Texas located brewing facility?

Sparkadelic
Thursday, 05/12/2011 - 11:38AM

The "three-tiered" alcohol business system in Texas is an anti-consumer, anti-small business, anti-free market travesty that only serves to enrich the middleman while screwing everyone else in the state. It needs to be abolished so that the market can flourish, and businesses can succeed or fail on the strength of their product and appeal to the consumer. Kill the three-tiered system NOW!

Craft guy
Thursday, 05/12/2011 - 01:37PM

Chris: Budweiser has a large brewery on the east side of Houston along I-10 near I-610. I believe Shiner brew over 400,000 barrels annually but have we heard them opposing the bill?

John V
Thursday, 05/12/2011 - 09:34PM

I love my craft beer... New Belgian "Fat Tire" 2 Below" and many MANY others. That doesnt change the fact that the bill discriminates without reservation. Why shouldnt AB/Bev have the right to sell small quantities at the end of a tour like the local breweries. Social responsibility? Inability to regulate? No. I find the integrity of the bill lacks honor. You're hurting those that have enjoyed the smell of hops and barley during a tour only to kick them out without a happy ending. And that sucks.

J. D. White
Friday, 05/13/2011 - 04:20AM

This was a really good article; it's about time we see some exposure on the ridiculous power that Anheuser-Busch InBev and the few other mega-breweries hold over the broken three-tier system. I'd much rather see a small Texas-owned brewer benefit than a massive foreign-owned operation like AB InBev (yes, the venerable "American" brand of Anheuser-Busch actually sold out to Belgian-owned InBev in 2008. And for the curious, the other big "American" brands are South African/Canadian owned (Miller & Coors). And before you start looking at other big-named brewers, consider that most of the brands you see belong to one of these three breweries, or to one of the handful of other international mega-brands.

InBev also owns: Shock Top, Labatt, Bass, Natural Ice, Busch, Rolling Rock, Michelob, Lowenbrau, etc.

SAB Miller Molson Coors (yeah, Miller and Coors are basically the same company in the US) also own: Blue Moon, Killians, Keystone, Corona, Grolsch, Dos Equis

Those owned by Heineken International include: Amstel, Newcastle, Murphy's, Foster's, and Beamish

Diageo owns: Guiness, Harp, Red Stripe, and Smithwick's

Even the famous Texas brand Shiner goes out of their way to hide the fact that they've been owned by The Gambrinus Company (who began life as a distribution company whose sole purpose was to introduce America to Corona) since 1986.

So, the 1,753 breweries you see that make up the American-owned beer brands mentioned in the article...how much can they possibly be hurting these behemoths?

Quite simply, they're not...and that's a shame. It's time Americans put the fizzy yellow liquid these guys have been marketing to us as "beer" back in the horse they got it from and support the actual American brewers!

(Side note -- I'm not employed by, and I've got no financial interests in any of this. I'm just a guy who loves good beer.)

Vagabond
Friday, 05/13/2011 - 05:02PM

This article is not about the beer. It is about fairness in the laws. If one brewery can sell direct to the customer, they should all be allowed to sell directly.

On a side note, I find all you pretentious beer snobs pretty silly. I do like beer both small brews and I drink mass produced domestic. I have had the local beers in most areas of Germany and Belgium and enjoyed 90% of them, but I will also drink a Bud or Miller lite and enjoy them also. In blind taste tests they score right up there with the best. If you claim to like imports better than american beers all you are saying is you like stale crap that does not taste like it is supposed to. No imports (except Canada) taste like their counterparts served where they are brewed. In most cases nothing like the originals.

Get over yourselves and drink what you enjoy while keeping your mouth shut about what anyone else likes.

Anti Vagi-Bond
Thursday, 05/26/2011 - 03:10PM

Vagabond, you are missing the point of this article. American made CRAFT beer is what is being talked about, not shitty imports and megabrand swill that is made with all sorts of cheap half ass ingredients and served ice cold so you don't have to really "taste" how bad it is.

Ani-Vagi Bond
Thursday, 05/26/2011 - 03:14PM

John V--- You do not get it either. The beer wholesalers insisted that the bill limit the ability to sell beer at brewery tours but large brewers with the specific intent to be able to say they "tried", knowing that AB-INBEV would object to this terminology. All of the was done so that it appeared that they were interested in helping small breweries when they really just want to maintain the status quo.

Houston Homebrew
Thursday, 05/26/2011 - 06:07PM

Hey Vagabond....let me know how the next tour over at the Bud plant in TX goes....oh wait...thats right. They dont even offer tours. That is how ridiculous this is....they are opposing a bill that allows small breweries to sell a small amount of beer after a tour to consumers when they don't even have tours.

PhoenixArising
Friday, 05/27/2011 - 03:20PM

AB get over it, people are into the quality something you have omitted from your product. Over priced too.

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