Economic experts warn that the impending merger between beer giants Budweiser and Miller may have a significant impact on the fate of craft breweries in Texas and across the nation. The precise nature of that impact, however, is a matter of some discussion among those closest to the issue. Some believe that the merger could have a positive effect on craft breweries by increasing the cachet of these flavorful beers in the consumer marketplace. Others predict that the increased financial resources available to the merged companies will allow them to market their products more effectively, cutting into the sales and revenues for craft breweries. For brewpubs currently operating with a Houston beer license, keeping an eye on this developing news story can ensure the highest level of proactive response to the market changes ahead.

The Biggest Beer Merger Ever

The purchase of SABMiller by Anheuser-Busch represents the largest single acquisition in the history of the beer industry. Anheuser-Busch offered well over $107 billion for Miller in a deal that is still being examined by federal lawmakers. Concerns have been raised that this merger will in effect create a near-monopoly in the beer industry. It is estimated that one out of every three beers sold in the U.S. will be produced by the company resulting from the merger of Budweiser and Miller.

Statistics and Rankings

Sales figures for 2015 indicate that the Bud Light, Coors Light, Miller Lite, Budweiser and Michelob domestic beer brands continue to dominate the U.S. marketplace:

• Bud Light brings in approximately $2.0 billion annually as the top-ranked in sales for the U.S. marketplace.
• Coors Light pulls in $1.0 billion in sales each year.
• Miller Lite ranks third at $862.6 million in annual sales.
• Budweiser rakes in $718.7 million for Anheuser-Busch per year.
• Finally, Michelob Ultra Light is ranked fifth in annual sales at $428.2 million.

Despite the different branding approaches and names attached to these beers, two companies are responsible for all five of the top-selling beers for 2015:

• SABMiller produces both Coors Light and Miller Lite.
• Anheuser-Busch manufactures Michelob, Budweiser and Bud Light.

The proposed merger will not include Coors; instead, Molson Coors intends to buy out the controlling interest currently held by SABMiller and to operate independently from both companies. Nonetheless, the combined economic force of these two brewery powerhouses is likely to impact the craft beer industry in a number of ways.

Craft Beer on the Rise

In 2014, craft beer producers maintained an 11 percent share of the overall marketplace and accounted for $19.6 billion in sales overall. The nature of craft brewing, however, means that those sales and profits were divided among numerous small companies. The Texas Alcoholic Beverage Commission (TABC) is responsible for issuing licenses to brewpubs, craft breweries and other enterprises that produce or sell alcohol to consumers. Current figures indicate that approximately 156 brewpubs and breweries currently hold a TABC license to produce beer in the Lone Star State.

Potentially Damaging Effects

Some smaller breweries fear that the proposed merger between Miller and Anheuser-Busch will have a chilling effect on their ability to obtain aluminum cans, glass bottles and raw materials with which to produce their brews. The power wielded by the new mega-corporation could significantly reduce the ability of craft brewers to compete for supplies and market space. Worse yet, both Anheuser-Busch and Miller have histories of purchasing craft breweries and continuing to sell their products without relabeling or indicating their ownership position to consumers.

For brewpubs and craft breweries, maintaining a valid Houston alcoholic beverage license can limit issues with regulatory agencies and other state authorities. Adopting a proactive approach to current supply chains can also ensure that operations can continue without interruption even if this mega-merger goes through.

A business can benefit greatly when it succeeds in gaining a Texas liquor license. Alcoholic beverage sales produce considerable revenue for hotels, night clubs, restaurants and stores. They also lure customers who spend money on other products or services. Unfortunately, some parts of the Lone Star State still enforce complex liquor laws that create numerous obstacles for business owners. One example is Waller County, where it often proves difficult to determine what rules apply in different towns, cities and election districts.

Jurisdiction

The Texas Alcoholic Beverage Commission issues permits to companies that want to sell drinks in this region. However, the county lets local governments decide what kinds of beverages they can serve. Businesses may sell wine and beer in many eastern areas, and cocktails remain legal in some southern districts. State law allows cities and towns to hold elections that determine if they will permit certain types of spirits to be sold. Voters in several districts have opted to legalize beer, wine, mixed drinks or all alcoholic beverages. Regrettably, these jurisdictions are not limited to municipalities or even current election precincts. This adds to the confusion.

Localities

State and county rules give several different types of districts the right to introduce their own liquor laws. In addition to cities and towns, they include current and former justice of the peace districts. Some precincts held elections before their boundaries were redrawn during the redistricting process. As a result, the authorities can only enforce local TABC license rules within the previous borders. This makes it even more challenging for business owners to determine what restrictions apply to them. For example, two portions of the same town may allow different beverages. Waller County officials remain unable to supply complete information about the laws in every district.

Clubs

These confusing Texas liquor license laws prevent many businesses from obtaining the Texas alcoholic beverage license they need. In addition to enforcing drink restrictions, some locales require customers to join drinking clubs before they can order spirits. The process of establishing and maintaining a club frequently proves complex. It can also add over $15,000 per year to a restaurant or hotel’s operating costs. Most businesses remain unwilling to set up these clubs, so the law has discouraged a number of eateries from opening new locations in Waller County. Nonetheless, it can be lucrative for a popular business to create a drinking club for its customers. A substantial amount of licensing expertise is needed to accomplish this.

Cocktails

While numerous Waller County establishments have succeeded in selling beer or wine, very few offer cocktails. Local regulations have made it particularly hard to obtain a permit to sell such beverages. This denies most businesses the ability to serve an especially popular and profitable item. For instance, Asian restaurants in many parts of the nation sell Mai Tais in considerable quantities. They often command prices exceeding $4 per glass. The popularity of this beverage helps eateries boost food sales as well. Although it is difficult to accomplish, Waller County businesses can gain a major competitive advantage if they acquire licenses that permit cocktail sales.

The process of obtaining a Texas liquor license involves many steps. Waller County restaurants and inns must start by carefully identifying the local rules that apply to them. Otherwise, the authorities may deny their applications or fine them for breaking the law. Businesses also need to pay state and county fees, notarize TABC applications and establish drinking clubs where necessary. They can expedite and simplify this cumbersome process by requesting third-party assistance. Texas liquor licensing experts have the knowledge needed to help businesses quickly gain permits and follow every relevant law. This makes it possible for local establishments to boost their income and attract many new customers.

Corkage fees are assessed when diners bring their own alcoholic beverages into a restaurant or bar. These fees are designed to make up for lost revenues from wine sales and vary depending on the venue. The legality of corkage fees and bring-your-own-bottle practices depends on the type of Texas alcoholic beverage license held by the establishment. Understanding the rules and the etiquette involved in bringing your own bottle of wine into a Houston restaurant or bar can help you make the most of special evenings out with friends and family.

Navigating Texas Liquor Laws

The Texas Alcoholic Beverage Commission (TABC) administers and enforces laws relating to the alcoholic beverage industry in the Lone Star State. The regulations governing corkage services are relatively complex:

• Patrons are not allowed to bring their own alcoholic beverages into Texas restaurants and bars that hold private club permits.
• The same restrictions apply to bars that maintain mixed beverage licenses allowing the sale of distilled spirits to customers.
• Establishments that do not serve distilled spirits or that do not maintain a license to serve alcohol, however, are legally allowed to provide corkage services to their guests.
• Corkage fees are legal in the bars and restaurants allowed to provide these services. Texas law does not place any restrictions on these fees.

Some restaurants and bars that are eligible to offer corkage services choose not to do so. Others may require the purchase of a bottle of wine or a relatively large corkage fee to recoup the perceived loss of revenues from expected wine sales. Before bringing your own bottle of wine or alcohol, it is a good idea to contact the establishment to determine the fees and policies associated with their corkage services.

Corkage Etiquette

While calling ahead to check on the availability and cost of corkage services is essential to avoid unpleasant surprises at the bar or restaurant, there are also a number of etiquette rules and procedures relating to corkage.

• Check the wine list of the restaurant before bringing your own bottle; it is considered a significant breach of manners to bring a wine that could be purchased on site.
• Do not forget to inquire about the number of bottles you are allowed to bring; some restaurants and drinking establishments set a strict limit of one or two bottles per visit.
• Bringing in a cheap bottle of wine to avoid paying list price at the restaurant is also a faux pas.
• For restaurants that do not charge corkage fees, purchasing a bottle of equivalent value is a nice gesture that can encourage this practice. In some cases, restaurants that do charge for corkage may waive these fees for patrons who purchase a comparable bottle from their wine list.
• Depending on the size of your party and the general atmosphere of the restaurant, offering your server a taste of the wine is also considered polite. This only applies, of course, if your server is old enough to imbibe legally.
• Calculate your tip based on the value of the wine bottle as well as the cost of other food and drinks. This can ensure that your wait staff are not shortchanged, especially in restaurants that charge minimal or no corkage fees.

A number of Houston restaurants offer free or very low cost corkage services for their customers. By checking around for the best deals, food and wine lovers can enjoy the best dining experience for their hard-earned money.

For restaurants and bars interested in offering corkage services, working with a company that specializes in Texas license services can provide added guidance on applicable rules and restrictions. Staying on the right side of the law can help these businesses maintain their TABC license while avoiding citations and fines for infractions of the Texas legal code.

On September 14, 2015, Deep Ellum Brewery took legal action against the Texas Alcohol Beverage Commission (TABC) in an effort to overturn what the company describes as an archaic law that unfairly limits its ability to compete with brewpubs, distilleries and wineries in the state. Many of the laws governing the sale of alcoholic beverages in the Lone Star State were enacted during Prohibition and have not been seriously revisited since that time. In 2013, the increasing popularity of craft beer led to reduced restrictions on its sale for on-site sales and consumption at microbreweries and brewpubs; however, more must be done to even the playing field for all companies with a current TABC license.

Unequal Treatment of Businesses

The law prohibiting breweries from selling their products for off-site consumption is particularly unfair because other businesses are not constrained by these regulations. For instance, wineries and distilleries can sell their products on-site for carryout and consumption elsewhere. This difference in how businesses are treated under TABC regulations can have a significant effect on the profitability of craft breweries in the competitive marketplace. The lawsuit filed by Deep Ellum Brewery is intended to even the playing field for breweries and to provide added options for consumers in the state of Texas.

Other Legal Challenges to TABC

Earlier this year, Wal-Mart filed suit against the TABC to overturn legislation that prevents the mega-corporation from selling alcohol. TABC regulations prevent public companies from selling hard alcohol of any kind and limit private companies to ownership of five or less liquor stores unless the permits for additional stores are purchased from a blood relative. If this lawsuit is successful, Wal-Mart could soon enter the retail alcohol market in Texas, presenting even more competition for breweries that cannot even offer carryout sales for their current customers.

Big Corporations Still Calling the Tune

The 2013 legislation that offered a small measure of relief for beleaguered craft beer producers was orchestrated in part by Rick Donley, the president of the Beer Alliance of Texas. While his efforts did provide some much-needed breathing room for small-scale craft breweries, the adjustments fell far short of the changes needed to ensure profitability and public access to the products of small craft brewers. Donley has advised a wait-and-see attitude for craft breweries interested in pursuing further reforms and changes to bring Texas law into the 21st century. Many brewers, however, feel that they have waited long enough for their chance to compete on a level playing field with other businesses in the Texas alcoholic beverage industry.

Fast Growth Fuels Friction

One obstacle to TABC reform is the pressure from other elements of the industry to retain the status quo. Craft beer producers have seen an enormous increase in popularity over the past decade. These added sales are due in large part to increased consumer awareness of the quality and variety of products available through these small-scale breweries. Larger companies and distributors have a real stake in preventing craft breweries from making further inroads into their markets and have brought pressure to bear on regulators to stop any further expansion of opportunities in this fast-growing sector of the industry.

Depending on the outcome of both the Deep Ellum and the Wal-Mart lawsuits, craft breweries may see significant changes in the next few years. Acquiring and maintaining a Houston beer license can be the key to taking advantage of the potential new opportunities in the take-out alcohol marketplace. Additionally, a Houston liquor license can allow these businesses to operate under current laws and to serve customers who wish to consume beverages on-site during their visit. By staying on the right side of the law and working to improve the regulatory environment for their operations, craft breweries can continue to achieve growth and profitability in the Houston marketplace.