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You are correct about there being a loophole in some cases. Most beer joints are actually licensed for on and off premise consumption. And in the application, TABC does ask if the total for alcohol sales is over 51%, not the total from alcohol sales for on premises consumption. So, some bars (BG licenses) may get an incorrect sign, but it is really a rare thing. After all, how many icehouses (probably a better - more politically correct - term than beer joint) sell more for off premises than off premises?

But in a weird legal way, Spoetzl does not sell their beer for consumption at all. They cannot legally sell to a consumer, so they can't sell for consumption. In the eyes of the law, they sell their beer for distribution. That is part of that three tiered system I referred to in a different post, where a manufacturer must sell to a distributor who must sell to a retailer. Incidentally, this is also why they can give away the beer in the sample houses but not sell it there. So the application for manufacturing licenses and distribution licenses never even ask the question about 51% and Spoetzl cannot have a red sign at all.

Believe me, if you thought the Penal Code could be written in a confusing manner, wait until you try to read the Alcoholic Beverage Code. As an example, while I use the term license, there is a legal difference between a license and a permit. One can make or sell liquor while the other can make or sell beer. And I always forget if it is a liquor license and beer permit or the other way around.

And the Education Code can make either of them look very plain. As seen by our favorite question of what a school is.

Katygunnut wrote:Just throwing this out there, but what if it is a contracted operation and the brewery pays the contractor for the samples that are "given away" to the public? Still doesn't address your point about a contractor having to sell more than one brand, but if they somehow get around that (possibly by having a few cans of Budweiser under the counter that are available for sale, but not displayed or marketed?), then it is possible that the contractor is deriving revenue for the beer sales even though the beer is free to the public.

Well, I have to admit that this would be an interesting case. I don't know if it would be legal for Spoetzl to pay for it, but I can't see how that would be different than me walking into a bar and buying a round for the house (well, besides their having the money to do it).

On a different note, the law about more than one brand actually includes situations like you mention. The other brands have to be prominently displayed and offered publicly, etc. It really is an attempt to force fair competition.

Ok, let's try to clear it up for anyone who is confused. The 51% law is solely pertaining to income received from sales for on premises consumption. The law is Government Code section 411.204 and it specifically says "derives 51 percent or more of its income from the sale of alcoholic beverages for on-premises consumption". As you can clearly imagine, there is no way Spoetzl Brewery gets more than half of its income from sale for on-premises consumption.

Texas has, by law, what is called a three tier system of alcoholic beverage sales. This means that it is generally illegal for anyone who owns any part of a manufacturer to also own any part of a wholesaler or retailer. The same concept applies for all three levels. In other words, because Spoetzl is a manufacturer, it is illegal for them to sell their product to anyone other than a distributor, which must only sell it to a retailer. There has been some change in this as the business world has changed, so micro-breweries are now legal where they can manufacture for sale on their own premises only, as are wineries.

And that also explains why there is no gun sign line on the Spoetzl license in the database. Since it is impossible for them to get retail income, there is no question about the sign that should be present. There is no place in the manufacturer's license database for the question.

And that gets us to which sign should be there. One of the other tricks to remember is that there is only one license allowed to be issued per company at any single premise. So, if the property is owned and operated by Spoetzl, they MUST post a blue sign at the entrances to the property. Note that this is not the entrance to the sample room, but to the licensed property. If they have contracted out the operation of the sample room, then a red 51% sign MIGHT be possible, except for two other things. First, note again that the sign is income based. There is no income from giving away samples. So, if they sold a single other item or souvenir, they could not possibly get half their income from the sale of alcoholic beverages and it would be a blue sign. Second, as proof that it is not a contractor, there is another clause in our laws that prohibits what are called tied houses. A retailer must offer brands from more than one manufacturer for sale. If you went and they only offered Spoetzl's brands in the sample house, it must be part of the master license for the manufacturer.

My conclusion is that the red 51% sign must be wrong. I will give the caveat that it has been a few years since I dealt with this area and I could be wrong. There was a specialist at TABC in marketing practices and it was a very gray area that other agents would call him all the time with questions. There also could have been changes since I worked there. I would recommend a call to the local TABC office to ask them to verify which sign should be there.