Very few. In fact, in more than 10 years of covering the beer industry, this is the first time I have seen so many parts of the industry united.
The TABC held a major stakeholder meeting recently to discuss a lawsuit and rule-making petition asking for changes to the Texas restrictions on private label beer, and the solidarity was clear: Major breweries, craft breweries, all wholesalers, and most retailers strongly object to the market disruption that private labels threaten to create in Texas.
Only a small group of mega-retailers favor private labels using “contract breweries” to vertically integrate – assuming roles in more than one area of production, which we’ll get into later – creating dirt cheap “malt swill” and cutting into craft brew and mega-brewery sales alike.
To the affected stakeholders, the most distressing new entrant is Frio – a beer being sold well below the former college favorites of PBR and Natty Light, possibly as a loss leader to attract customers for other groceries.
Stakeholders have long suspected that there is a financial arrangement between HEB and Frio, and we have heard that the TABC is investigating a link between the two, although neither side is publicly admitting to a relationship.
I went to a local H-E–B grocery here in Austin the other day and told the friendly employee handing out beer samples that I was looking for some cheap beer to “buy in bulk” that wasn’t Lone Star.
He thought a second and shrugged.
“You want cheap? Well, you know you could always go … you could always go with H-E-B beer, and that’s Frio,” he said, laughing. “Frio is 30 beers for $16 right there. If you’re buying in bulk, that’s the way to go.”
I told him I’d probably buy that good beer he’s already passing out but would also try a six-pack of the tall boys because I needed cheap and, again, “I don’t like Lone Star.” (True story)
Then I asked him if he’d just called it “H-E-B beer.”
“We can’t call it that, but that’s what it is, you know what I mean?” he said.
They can’t call it that, officially, because in Texas, it’s against the law to name the beer after the retailer that sells it or brew a beer solely for one retailer.
That’s because it’s against the law to have “tied houses” – companies that are in more than one tier of the alcoholic beverage business.
And that’s because it screws up the marketplace and messes with the three-tier system that’s in place to protect the public from monopolies. And by “the public” I mean, “including craft brewers.”
This is why private-label regulations need to stay in place in Texas, and be even more strongly enforced.
This is why Walgreens’ “Big Flats” beer isn’t “Walgreens Beer” though it might as well be. The distributor does sell a portion of it outside Walgreens, but not most of it. (Frio can be found elsewhere, too. Like the Valero convenience store we frequent. Just not most places.)
It’s also why Frio Lite (there is no Frio non-Lite) tall boys (“there are no small boys,” as the employee put it) isn’t officially called “H-E-B beer.”
Except that sometimes it is. Proven by my encounter with the minimum-wage-ish-worker-whom-I-won’t-identify-and-turn-into-a-scapegoat.
Read more below the jump.