Saturday, May 18, 2013
By Ann S. Kim email@example.com
The Legislature's Appropriations Committee will hear details of a plan for the state's wholesale liquor business that could provide Maine an additional $13 million per year while lowering prices for consumers.
The increased revenue would come from changes to the lease for Maine's wholesale liquor distribution. The current lease, held by Maine Beverage Co., expires in 2014.
The restructuring of the contract could bring Maine's share of revenues to more than $40 million a year and lower prices $2 to $7 a bottle, making Maine more competitive with New Hampshire's state-run liquor stores. It's estimated that Maine loses $10 million to $20 million in gross revenue to New Hampshire annually.
Highlights of the plan were described by Rep. Michael Carey, of Lewiston, the ranking minority member of the Veterans and Legal Affairs Committee. Gerry Reid, director of the Bureau of Alcoholic Beverages and Lottery Operations, briefly outlined the proposal to the committee earlier this week.
"The administration said there should be a competitive process so the state spends the least amount of money possible in order to get this service," said Carey, a Lewiston Democrat.
On Thursday, Reid declined to discuss the plan before his presentation to the Appropriations Committee. He referred questions to Adrienne Bennett, Gov. Paul LePage's spokeswoman. She did not return calls Thursday.
A future contract would not call for a large amount of up-front money, Carey said. In 2004, the state signed a 10-year lease with Maine Beverage for $125 million. That payment helped close a $1.2 billion budget deficit.
Rep. Diane Russell, D-Portland, compared the 2004 lease to a fire sale that took place in desperation.
"It may be that continuing to outsource our liquor sales will be the best value for Maine taxpayers, but without performance metrics, without hearing from people and without a transparent process, we can't be sure," said Russell, a member of the Veterans and Legal Affairs Committee.
Maine, one of 19 liquor-control states, is the only entity that can bring liquor into the state and set prices. Maine Beverage Co. is responsible for warehousing and delivery to agency liquor stores.
The contract was initially awarded Martignetti Cos. of Massachusetts. After Maine-based companies threatened to sue, Martignetti formed a partnership with Pine State Trading Co. of Augusta and Lindsay Goldberg, a New York-based financial group that holds majority interest.
The fair market value of the liquor distribution business was pegged at $378 million as of Jan. 1, 2009, according to a study performed by Deloitte & Touche that year.
Neither George Woods, Maine Beverage Co.'s CFO, nor D. Dean Williams, the president and CEO, returned calls seeking comment Thursday.
Carey said he knows of two Maine-based parties that are interested in the new contract, but would not name them. One has spent a significant amount of money to prepare for negotiations, he said.
The possibility of lower liquor prices was welcome news to Doug Weber, who owns Downeast Beverage Co., a shop on Portland's Commercial Street. He believes that he loses business from tourists and vacation-home owners who shop in New Hampshire before heading into Maine.
"There's a reason New Hampshire has these Taj Mahal liquor stores right on our border," Weber said.
Weber said that resources will be needed to fight the longstanding perception that New Hampshire's prices are always better than those in Maine.
Rep. Margaret Rotundo, D-Lewiston, said it appeared that much research and work has been performed to put together the plan.
"Clearly there's an opportunity there. There's an opportunity for the state to be making more money than it currently is. People in Maine deserve a fair deal with this contract," said Rotundo, the ranking Democrat on the Appropriations Committee.