Texas brewers would lose a potential source of capital and some flexibility in negotiating sales under a bill before the state Senate.

The Texas Craft Brewers Guild immediately opposed the legislation, as did one of the state's two major groups representing wholesale distributors - which called it "asinine" and "anti-competitive."

The bill, authored by state Sen. John Carona, R-Dallas, chairman of the Senate Business and Commerce Committee, would prohibit brewery owners from selling distribution rights for their beer and it would restrict them from selling beer at different prices in different geographic areas.

Scott Metzger, owner of Freetail Brewing Co. in San Antonio, has been actively involved in talks regarding a separate package of bills designed to help the state's growing number of independently owned craft breweries and brewpubs.

He said the major provisions of the Carona bill were not raised during pre-session negotiations among lawmakers and industry stakeholders and he said the Craft Brewers Guild opposes all of them, whether in this bill or if they should be added later to other legislation.

Supporting the bill is the Wholesale Beer Distributors of Texas, which represents the majority of distributors that by law have exclusive rights to sell beer from breweries to retailers. Attorney Keith Strama characterized the provisions as housekeeping that would clarify what already is not allowed by the state's alcoholic beverage code.

Strama said, for example, the code does not explicitly authorize selling distribution rights and so it really should not be legal. He cited "confusion in the marketplace."

But Rick Donley, president of the Beer Alliance of Texas, which represents Silver Eagle Distributing and other major wholesalers that collectively handle more beer volume in the state, said the bill would do "great harm" to the ability of craft brewers to grow and get products to market.

'Anti-competitive'

"It's probably the most anti-competitive piece of legislation I've ever seen," Donley said. Change the topic from beer to hydrocarbons or other consumer goods, he said, and the proponents would "be laughed out of the Capitol."

Under the state's three-tier distribution system, brewers cannot sell directly to retailers or consumers but must, with a limited exception for smaller breweries, enter exclusive contracts with wholesalers to sell the beer to retailers in designated territories.

Distributors can pay breweries for those rights, although payments are not required and can take different forms.

Donley said the practice is becoming more common as the craft segment grows. These generally smaller brewers reach a point where they need an infusion to expand, he said, and selling distribution rights is a potentially large source of capital.

Denying breweries this option goes against the charge of the pre-session working groups to stimulate economic development in the craft industry, he said.

Carona's bill would not stop distributors from selling the rights to individual brands to other distributors.

A single price?

The legislation also would force brewers to sell their product at a single price to all distributors, regardless of where in the state the beers may be sold.

Again, Strama said this would clarify existing law while Donley called it an unfair restriction that ignores varying economic conditions across the state. Other states that have enacted such laws, Donley said, have seen retail prices increase as a result.

Meanwhile, a package of four bills that would ease other restrictions on craft brewers continues to gain co-signers in the Senate, Metzger said.

In addition to letting shipping breweries sell some beer directly to consumers for on-premise consumption and brewpubs package some beer for sale by outside retailers, the bills would give out-of-state breweries some self-distribution rights.

Strama, of the Wholesale Beer Distributors, said his group does not support those bills as currently worded.

Another potentially significant provision in the Carona bill seeks to force any court that rules in-state and out-of-state entities are treated unequally under the alcohol code would have to prohibit, rather than approve, the activity in question for both sides.

Donley called that provision a "poison pill" that ultimately could be used to eliminate any self-distribution in Texas.