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In Market: Texas distillers thrive, but hoped for more from state

June 21, 2019 3:16 PM | Anonymous

Fort Worth Business Press

BLK EYE will have the official bottle release party for its BLK EYE Spirit Number 5 on Saturday June 22 from 2pm till 9pm. Bottle Sales, Limit two per person. $45.00 per bottle. Get Free Tickets - reserve your Saturday spot on our Facebook Event Page. If there is a line, all ticketed fans will be given priority entrance at the distillery.

Since his new specialty distilled beverage was first barreled in 2017, Todd Gregory has been looking forward to the day it would make its debut.

That would be Saturday June 22 when BLK EYE Distilling Co. scheduled a release party to celebrating the launch of BLK EYE Spirit Number 5, made with black-eyed peas and corn.

Because black-eyed peas are not a grain, the new product can’t be called whiskey, explained Gregory, co-owner of BlackEyed Distilling Co., which produces award-winning BLK EYE Vodka and a whiskey in a converted historic firehouse in Fort Worth’s Near Southside.

“But it looks like whiskey, it smells like whiskey and it tastes like whiskey,” said Gregory. “In fact, we think it is one of the best things we have tasted in a long while.”

Gregory has plenty to be proud of with this new unique new product that has been aging in heavy-charred American oak barrels for more than 24 months. The yield is 598 bottles of a spirit that is 46 percent alcohol and 92 proof.

But Gregory was hoping that he would have more to toast at the party than his new spirit.

He had hoped that the Texas Legislature would have given and other craft distillers in the state a break from archaic liquor laws that are making it hard for them to grow their businesses.

Of the 100-plus alcohol bills that were introduced this past legislative session, only one priority bill of craft distillers made it into law.

That legislation, known as “sampling of product,” was co-sponsored by GOP state Sen. Kelly Hancock of North Richland Hills and GOP state Rep. Charlie Geren of Fort Worth. It allows a distiller to directly offer product samples to a retailer, restaurant or hotel without the presence of a wholesaler.

The top priority bills for craft brewers though died without a vote.

The “bottle bill” would have been a huge boon to the craft distilling industry by raising the limit on the number of bottles distillers could sell from their distilleries.

The current law restricts distillers to selling two bottles per person a month from distilleries, up to a limit of 3,500 gallons per year.

The Texas Distilled Spirits Association, a trade group of craft distillers, has pushed unsuccessfully since the 2015 legislative session to allow distillers to sell two bottles of each product – instead of two bottles in total – that they manufacture within a month.

“We have never asked to raise the 3,500-gallon limit,” said Mike Cameron, president of the distiller spirits association. “Most of our distilleries don’t get close to reaching that limit and this would give them the opportunity to do that.”

Some of the smallest among the 140 permitted distilleries and approximately 100 active operators don’t have tasting rooms to introduce their products to the public, Cameron said. In those cases, customers who stop by those distilleries have to buy without tasting.

Further crippling small operators, wholesalers select a limited number of products such as key lime rum from producers for display on liquor store shelves, he said.

“They have no way to market their products,” Cameron said. “We suspect that a lot of them will be out of business by the time of the next (legislative) session in 2021.”

The other top priority bill that failed would have allowed distillers to sell their products at festivals and events similar to the rights given to wineries.

That would have been another marketing opportunity for struggling operators.

Craft beer brewers, who faced similar struggles without ability to sell beer to-go from their breweries, finally prevailed after multiple repeated attempts to lift the ban on to-go sales. Beer to-go from breweries will become legal in Texas on Sept. 1

Craft distillers faced opposition from two powerful lobby groups, the Wine and Spirits Wholesalers of Texas, representing distributors, and the Texas Package Store Association.

The retailers group has strongly opposed a legislation that would impact the three-tier system, which is the foundation of Texas alcoholic beverage laws.

In a statement regarding direct sales to consumers, the package store group said direct sales pose a safety risk to consumers.

“The direct consumer sales make the consumer vulnerable to potentially unsafe or tainted alcohol,” the group said. “The single stream system used in markets such as Europe, India and Mexico have no checks and balances to ensure the products are safe to consumer and that tainted alcohol can be tracked back to the source.”

The group also said that the three-tier system provides “checks and balances in the way that alcohol is distributed and sold.”

Craft distilling has come a long way in Texas during the past five years and now ranks as the third largest in the country behind California and Florida, according to the craft distilled spirits organization, which is undertaking an economic impact study to determine its value and worth to the Texas economy.

For Gregory, who is adding his fifth product to his lineup, the failure of the festivals and bottle bills “stifles my ability to grow and market my products.”

With the rapid growth of the craft distilling industry in Texas, producers are challenged more than ever to find adequate liquor store shelf space to build their brands, Gregory said.

And, that is ironic.

“If any manufacturing industry came to our state and offered to build in excess of 100 factories, the economic support would be overwhelming from all state and local leaders,” Gregory said.

“Guess what, we are already here, but struggling with laws created in 1933 that did not forecast the craft distillery movement and anticipate supporting the local manufacture of alcohol in Texas,” he added.

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Amber Hausenfluck, Government Affairs: (512) 617-4523
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