The explosion in Texas-based ready-to-drink cocktail companies is forcing state lawmakers to consider a pair of "common sense bills" that would allow the booze-infused canned drinks to be sold in grocery and convenience stores.
The phrase "common sense" may seem counterintuitive when referring to bills under consideration in the Texas Legislature, but stay with us.
Currently, state law allows the sale of beverages under 17% alcohol by volume (ABV) at grocery and convenience stores. However, anything containing an alcoholic spirit such as vodka or tequila, even in minute quantities, is allowed in liquor stores only.
So, even though many spirits-based ready-to-drink cocktails, or RTDs — think ranch waters and alcoholic seltzers — contain no more alcohol than wine or many beers, they're not available at the local H-E-B or in convenience-store coolers.
"I always knew I wanted [our products] to be liquor-based, and I knew the challenges that would come with that, particularly in Texas. I knew that we would be limited to liquor stores," said Amelia Lettieri, CEO of Austin-based RANCH2O Spirits, whose canned cocktails are just 7% ABV. "If you look at other states, though, they allow liquor to be sold in grocery and convenience stores. Texas liquor laws go all the way back to prohibition, and we, as a society, have changed so much. I think that it's time that Texas evolves to meet consumer demands."
Other Texas-based RTD purveyors include Ranch Rider, Lone River Ranch Water and Canteen Spirits, all of which offer more than one sipper with distilled spirt bases. None of those ventures is headquartered in San Antonio, and most canned cocktail producers here use wine or malt liquor in their concoctions.
Texas Rep. Justin Holland, R-Rockwall, apparently agrees with Lettieri's assessment. On Feb. 13, he introduced HB 2200, the House version of a bill that would enable grocers and convenience stores to carry spirits-based ready-to-drink cocktails.
"In Texas, beer- and wine-based RTDs can be sold in more than 30,000 ... grocery and convenience stores," Holland said. "Meanwhile, [spirits-based] RTDs with the same or lower amounts of alcohol can only be sold in 3,200 locations. My bill closes this loophole, providing economic opportunity to tens of thousands of Texas businesses."
Holland isn't exaggerating when he talks about the change bringing economic opportunity, proponents say.
Canned tipples have become the fastest-growing spirit category by revenue, according to the Distilled Spirits Council of the United States, or DISCUS. The International Wines and Spirits Record database, which tracks alcoholic beverages in 157 countries, notes 1,600 new spirits-based drinks came to market in 2022, up from fewer than 1,000 in 2020.
"As someone from Texas, I know how frustrating it can be to have to go from store to store simply to purchase my favorite canned cocktails," DISCUS President and CEO Chris Swonger said. "As [spirits-based] RTDs gain in popularity, states all across the U.S. are taking a look at beverage laws to ensure consumers of these products are being treated fairly ... Texas consumers should not get left behind."
What's more, the distilled-spirits industry is a big economic driver in Texas, contributing to manufacturing, hospitality, tourism and agriculture — all still recuperating from the COVID-19 slowdown. Currently, some 92,000 Texas jobs depend on the spirits industry, which generates more than $9.6 billion in state economic activity each year, according to DISCUS.
Swonger argues that easier access to spirits-based RTDs will give the industry a boost, further increasing its contribution to Texans' livelihoods.
Other states moving ahead
Texas isn't alone in weighing legislative changes in the wake of the RTD boom. Currently, 25 states now allow equal retail access to beer, wine and spirits-based RTDs with Vermont being the latest to change its law.
"Alcohol is alcohol is alcohol, and we just don't see why we can't sell spirit-based RTDs in convenience stores and grocery stores in Texas," said Paul Hardin, CEO of Texas Food & Fuel Association, which represents more than 12,000 grocers and other retailers across the Lone Star State. "It makes no sense that consumers can come into our stores and pick up malt-based seltzers but can't do the same with their favorite spirits-based canned cocktails."
The current law is confusing to consumers, Hardin argues, plus it unnecessarily restricts the sales of businesses that already sell drinks with comparable alcohol levels.
"Allowing our members to sell these lower-ABV products would not only support their growth but the growth of many Texas-owned businesses looking to get into the RTD market," he added. "These products contain the same or lower amounts of alcohol than beer- and wine-based beverages ... there is no reason to treat them differently."
RANCH2O Spirits' Lettieri said a loosening of the retail law would benefit more than her own bottom line.
"Opening up the door for something like this wouldn't just help my business, but also a lot of convenience and grocery stores who are losing revenue because people wanting these products have to go elsewhere," she said. "This would really change the game."
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