Speak No Ale: Beer Men Sue for Free Speech

Tanks at Jester King Craft Brewery (Photo by John Anderson)

In vino veritas – so the saying goes – but the same may not apply to Texas ales. Lawmakers have struggled for years to reform Texas' misshapen beer market, but now three Austin businesses are taking a new legal tack: charging that the existing Texas laws are not just bad for business, but also violate the First Amendment by putting unlawful restrictions on free speech. Ron Extract, managing partner of the Hill Country's Jester King Craft Brewery, told the Chronicle, "There's an injustice here, a real difference in the way we're treated against the way the Texas wineries are treated or [how] the breweries are treated in other states."

Jester King, Zax Restaurant & Bar, and alcohol distributor Authentic Beverages are suing the Texas Alcoholic Beverage Commission in the U.S. Western District Court, in a federal lawsuit highlighting multiple failures of the current alcohol marketing laws. On Oct. 18, their attorneys requested a summary judgment from U.S. District Judge Sam Sparks, arguing that the state's laws are a contradictory and illogical mess. For example, a store can advertise what is on its shelves, but neither the brewery nor the distributor can tell potential customers where to buy their product – even if it is the same beer. In the suit, the firms argue that "the gag on breweries and distributors does not directly advance any substantial government interest," and ask that the state be enjoined from enforcing those rules. The parties anticipate a hearing sometime in November.

That in itself may not be the First Amendment violation; Extract argues that the Texas law forces him to lie about what is in his bottles. The rules in Texas seem very simple: A beer is any malt beverage containing 4% or less of alcohol by weight, and anything more potent must be labeled as either a malt liquor or an ale. Unfortunately, that is like saying all large pies are apple – it is simply not true. In fact, an ale is any beer brewed at a warm temperature, with yeasts that float to the top of the fermenter; a beer that is cold-brewed, with yeast at the bottom, is a lager. Even more ridiculously, breweries are barred from advertising the actual alcohol content of their products. Combined, Texas' topsy-turvy definitions mean that a discerning drinker looking for a low-alcohol pale ale could end up buying a high-alcohol pilsner – again, like biting into an apple pie and finding out it is actually peach. Authentic Beverages owner Rachel Fischer told the court that several out-of-state breweries have decided not to distribute their products in Texas because "they were unwilling to incur the financial and bureaucratic expense of making and producing special labels."

The core problem is the idiosyncratic way Texas splits up the alcohol industry. The three plaintiffs represent the three tiers of Texas booze: Tending the barrels are the brewers, next are the distributors, and finally the vendors. That separation, in principle, was intended to ensure that big brewers could not strong-arm liquor stores. Instead, the Texas system gave the whip to big distributors, who still carry heavy weight at the Legislature, and state laws have failed to adequately address production evolutions like microbreweries. That means craft brewers like Jester King cannot sell beer to people who visit their breweries, but a brew pub cannot sell anything to offsite consumers. Extract argues that those false divisions are holding back the Texas beer industry, both locally and nationally. He said, "Look at the most successful craft brewers in the country, and then check out how many are able to sell beer on-site."

The state has untangled that same knotty mess for the wine industry. Unlike breweries, wineries can sell directly to customers from any site they own. Since many large vineyards are located away from big markets, some are opening satellite facilities closer to their customers, like Bryan-based Messina Hof's tasting room in Fred­ericks­burg. And since 2005, vineyards have been allowed to tell consumers where to buy their products. Lou Bright, general counsel for the Texas Wine and Grape Grow­ers Assoc­i­a­tion, argues that there's "a finite amount of shelf space available" and that being able to tell customers where to buy their wine and being able to sell directly from the winery has been of "dramatic importance to the health and the growth and the future growth of the Texas wine industry." While still heavily regulated, the wine industry has flourished because of those differing rules, using sales and wine tourism to grow from a $1.35 billion industry in 2007 to $1.7 billion in 2009. Bright added, "If wineries can foster an industry and they can add economic value to themselves and to the community, and if they can do it without the negative and adverse effect you can get with the presence of alcoholic beverages, then what about our nascent and growing craft brewers?"