Sept. 29 (Bloomberg) -- Hurricane Ike isn't keeping Texas cowboys from slaking their growing thirst for specialty beers.

Just seven days after the worst storm in 25 years hit, 250 people showed up at Saint Arnold Brewing Co.'s regular Saturday tasting to listen to country music and sample beer, said Brock Wagner, the craft brewery's owner. A week later, the usual crowd of 500 turned out to try Texas Wheat, Divine Reserve or Fancy Lawnmower, a fruity, German-style brew.

``It's become cool to have a beer with flavor as opposed to just having the look of the cowboy and the longneck,'' said Wagner, 43, who forsook investment banking for brewing 14 years ago. ``People in Texas have become more cosmopolitan, especially in Houston, which is such a melting pot.''

Small breweries are rising to the challenge as Texans venture beyond beers made by behemoths such as Anheuser-Busch Cos. and MillerCoors, the two biggest U.S. producers. Sales of craft beer are increasing at an 18 percent rate this year, more than Anheuser-Busch's 13 percent in the state, said Nick Lake of Nielsen Co., a New York-based market researcher.

Some customers remain loyal to Lone Star, a longneck-bottle beer shown in the 1980 movie ``Urban Cowboy'' and now owned by Woodridge, Illinois-based Pabst Brewing Co. Marketing has waned for Lone Star, which calls itself the ``national beer of Texas,'' said Paul Gatza, director of the Brewers Association.

Craft beers may evoke flavors from apricot to coriander to coffee. For aficionados who want to enhance the drinking experience, they offer an opportunity to explore.

`Maximum Enjoyment'

``I can't drink like I used to in college,'' said Ricky Boehme, 41, holding an Oktoberfest beer on his third visit to Saint Arnold. ``I want maximum enjoyment for the couple that I will drink.''

Craft brewers' sales in the region of Texas, Oklahoma, Arkansas and Louisiana rose about 12 percent to 14 percent in the first half, compared with a 6.5 percent increase nationwide, according to the Brewers Association, based in Boulder, Colorado. The trade group defines craft brewers as making less than 2 million barrels of beer a year.

``People are really starting to discover some of the local breweries there and respond to the flavors,'' Gatza said.

Small scale is nothing new for one Texas beermaker. Spoetzl Brewery has turned out Shiner brand beers for 99 years in the town of Shiner, population 2,020.

Texas liquor laws don't make it easy, said Wagner, who had worked in Houston at Simmons & Co., Drexel Burnham Lambert Inc. and Wertheim Schroder & Co. Beermakers must sell through distributors or to retailers, not directly to the public. That reduces revenue and makes it tough for start-ups, he said.

Eight Survivors

Only eight of the 24 small breweries that opened in the state during the past two decades remain in business, Wagner said. They include (512) Brewing Co. in Austin and Southern Star Brewing Co. in Conroe. Saint Arnold is the only craft brewery in Houston.

Wagner avoids breaking the law by offering free beer rather than selling it during tastings at Saint Arnold. Each Saturday at 1 p.m., his staff leads a 45-minute tour for a $5 admission fee. Then each ticketholder gets a 2-pint (1-liter) sample.

Independence Brewing Co. in Austin and Rahr & Sons Brewery in Fort Worth also give beer samples. Brewers of craft beer produced 432,238 barrels in Texas last year, an 11 percent increase, according to the Brewers Association.

Saint Arnold's revenue rose 29 percent last year to $3.6 million. Business is good enough that the company is renovating a production facility that will have three times as much space, Wagner said. Hurricane Ike, which damaged buildings in the Houston area and knocked out electrical power in most of the city, didn't hurt the project, he said.

Transplants' Influence

He said demand is growing partly because more people are moving to Texas from other parts of the country. Dennis Wehrmann, owner of Franconia Brewing Co. in McKinney, said beer drinkers are becoming more open-minded and like having a choice.

``They like their average thing, what they do every day, which is the domestic beer, and then they like to discover new things,'' Wehrmann said.

The growth of smaller brands isn't hurting MillerCoors, said Pete Marino, a spokesman for the joint venture of London- based SABMiller PLC and Denver-based Molson Coors Brewing Co.

``Texas is obviously a very important beer market'' because of its size and demographics, he said. MillerCoors makes two craft-type beers.

St. Louis-based Anheuser-Busch, which has agreed to be acquired by Leuven, Belgium-based InBev NV, declined to comment. Anheuser-Busch still has almost half of the state's beer sales by volume, Lake said.

Parallel to Wine

The fact that Saint Arnold is a local business is one reason to drink its beers, said Randy Heallen, a 28-year-old native Texan. His friend Carl Norberg, 26, compared craft beers with wine.

``As your palate evolves, taste evolves,'' Norberg said.

Chad Threadgill, 29, sees a different motivation for men to drink boutique beers.

``They think that chicks dig guys that have the beer palate,'' Threadgill said. ``They're just trying too hard. It's just beer, buddy.''

To contact the reporter on this story: David Wethe in Houston dwethe@bloomberg.net.

Last Updated: September 29, 2008 01:00 EDT