Texans for Consumer Freedom is a registered 501(c)(6) education and advocacy organization of retailers, consumers, and free market advocates committed to eliminating anti-competitive aspects of the Texas Alcoholic Beverage Code and standing up for fair competition in the retail sale of spirits for the benefit of Texas consumers.
Texas is a state that prides itself as a champion of free markets and competition, however, the retail tier of the spirits market has for decades operated within a clearly anti-competitive model that prevents competition and consumer choice.
The Texas Alcoholic Beverage Code prohibits publicly traded companies from engaging in the retail sale of spirits, a clear violation of its mission to “ensure fair competition within the alcoholic beverage industry.”
The TABC’s mission specifically requires the commission to “ensure fair competition within the alcoholic beverage industry,” however, aspects of the code related to the retail sale of spirits are antiquated, anti-competitive, and in need of modernization. In a state that prides itself as a champion of free markets and competition, Texas’ package store ownership laws actually prevent competition and consumer choice.
As an illustration, Texas allows grocery store chain Fiesta to own and operate 17 package liquor stores in Texas, while prohibiting companies such as Walmart, Costco, Target, Kroger, Walgreens and CVS from doing so.
Since 1935, Texas code has limited ownership of liquor stores to no more than five permits per individual. For eighty years, this outdated provision has restricted free market competition and consumer choice.
A glaring exception to this five-store restriction is a loophole that allows members of a package store owner’s immediate family (first degree of “consanguinity”) to consolidate permits under a holding company and then acquire more permits.
The Austin American-Statesman, explained it this way: “The law allows permit holders related to each other within one degree of consanguinity –– related by blood –– to combine their permits. All it takes is a willing parent, child, brother or sister. Each eligible relative can buy five additional permits…and then put them in a holding company controlled by the liquor magnate-wannabe relative. In that way, a single person can, in effect, acquire multiple permits.” (Eric Dexheimer, “Attorney General Asked to Rule on Prohibition-Era Law,” Austin American-Statesman, 11/03/09)
This loophole has allowed some owners to circumvent the “five store restriction,” and amass hundreds of package store permits. Below are the “top ten” private chain permit holders, all of which are exploiting a loophole while also enjoying the state’s protection from competition with publicly traded companies:
|CHAIN||NUMBER OF PERMITS|
|SPEC'S FAMILY PARTNERS LTD.||163|
|TWIN LIQUORS LP||81|
|WESTERN BEVERAGES LIQUORS OF TEXAS INC.||71|
|GABRIEL INVESTMENT GROUP INC.*||48|
|GOODY GOODY LIQUOR INC.||33|
|D-Z LIQUOR CO.||19|
|SIGEL'S BEVERAGES L.P.||17|
Based on 2/22/17 TABC data. *NOTE: The Code makes an exception for ONE CORPORATION (Gabriel’s), which has more than 35 shareholders and owns 48 liquor stores.
According to TABC spokeswoman Carolyn Beck to Fort Worth Weekly: “If I own two or more package stores and my sister goes out and buys one or already owns up to five, hers can be consolidated into my legal entity, and I can end up with five more. If she ends up getting 10 outlets or more through consolidation, I can consolidate her locations into mine. And you can end up with an unlimited amount of stores.” (Eric Griffey, “Liquor by the Big Box,” Fort Worth Weekly, 3/16/13)
Current code has not only sheltered these private chains from competition, it has also allowed them to dominate regional markets. Private chains with at least 6 stores control massive amounts of the retail liquor market share throughout the state:
|COUNTY||MARKET SHARE OF LOOPHOLE FAMILIES*|
|RIO GRAND VALLEY||79.9%|
* Based on Jan. 1, 2014 value of business personal property as reported to county appraisal districts.
No. Package stores owned by public companies would have entirely separate entrances and would not be accessible from the retail store. Public companies would be required to abide by all current TABC safety and enforcement requirements designed to keep alcohol out of the hands of minors.
No. Modernization of the Alcoholic Beverage Code does NOT mean any adjustment to the three-tier system of manufacturers, distributors and retail package stores. Legislation is being pursued specifically to level the playing field and allow publicly owned companies to compete in the retail sale of spirits, not distribution.
No. Public company retailers are not attempting to modify the Texas Alcohol and Beverage Commission’s “blue law” regulations with this legislation. Legislation is being pursued specifically to level the playing field and allow publicly owned companies to compete in the retail sale of spirits and to eliminate the “five store restriction.”
Yes. Publicly owned, licensed retailers already abide by state requirements necessary to sell regulated products such as pharmaceuticals, tobacco, beer, wine and firearms. These retailers should not be excluded from competing in the sale of spirits as well.
All TABC safety requirements, day and time sales restrictions, age restrictions, and store design requirements would be followed and enforced by publicly owned retailers.