Politics & Other Mistakes: Drunk money
Al Diamon
The Bangor Daily News recently asked its readers in an online poll, “Do you travel to New Hampshire to purchase liquor?” The unscientific results: 42 percent said yes, while 58 percent checked no.
From this, we can conclude that 58 percent of the respondents are liars.
In reality, virtually all Mainers who drink hard stuff buy at least some of their supply in our neighboring state, where the prices are drastically lower. Only a complete clunkhead would do otherwise.
Just check out the deals.
In Maine, a 1.75 liter bottle of Absolut vodka retails for $34.99. In New Hampshire, it’s $24.99. That ten spot should more than cover gas and tolls.
Maine regularly sells a 1.75 liter bottle of The Famous Grouse Scotch for $43.99, but it’s on special in September for a mere $37.99. Of course, New Hampshire has a deal, too. Instead of the usual $39.99 (four bucks cheaper than Maine), it’s going for $30.99 (seven bucks cheaper).
While you’re next door, you might want to pick up some Jameson Irish whiskey, as well. Maine’s sale price of $22.99 for a 750 ml bottle (regularly $25.99) isn’t bad, but New Hampshire has the same thing for $19.99 (regularly $24.99).
But don’t take my word that shopping across the border is a bargain. Here’s what state Bureau of Alcoholic Beverages and Lottery Operations director Gerry Reid told the Legislature’s Appropriations Committee earlier this month:
“Our consumers in the state of Maine today do not get a good deal, and that is costing us business.”
Reid said Maine loses $10 to $20 million a year in sales to its rival, a figure that may be seriously low-balled. A New Hampshire official told me last year that his state estimates Maine consumers are worth $20 million a year in profit.
Not sales. Profit.
Reid has a plan to recapture some of that money by lowering prices, so Maine would be only a little more expensive than New Hampshire, instead of ridiculously so. That makes sense.
He’d accomplish that by changing the way this state handles wholesale liquor distribution. That also makes sense.
Unfortunately, he would retain state control over both wholesale and retail prices, and ban anything remotely resembling competition. That makes no sense.
Right now, wholesale booze in this state is controlled by one business, Maine Beverage Co., which is principally owned by the Martignetti Cos. of Massachusetts. You might think Martignetti would be a strong advocate for lower prices to increase its sales, but you’d be wrong. Since Martignetti also supplies New Hampshire with much of its bottled alcohol, it doesn’t really care where you buy your hooch.
Maine Beverage paid the state $125 million upfront in 2004 to win that contract. Since then, its annual profit has been about $36 million, so, over the life of the 10-year deal, it will realize nearly a 200 percent return on its investment.
Or to put it another way, Maine Beverage took Maine’s suckers (translation: taxpayers) to the cleaners.
Reid is promising to fix all that. He wants to negotiate a new decade-long contract with either Maine Beverage or another slick operator that would return as much as $13 million a year in extra cash to the state. Part of that increase would be accomplished by making the next deal less lucrative for the wholesaler, and part would be the result of lowering prices so the percentage of Mainers who travel to New Hampshire for the makings of their favorite cocktails looks more like the results of that newspaper poll.
Trouble is, the folks who run liquor wholesaling operations are notoriously sharper at negotiating deals than government bureaucrats. There’s no guarantee the next contract won’t be long on promises and short of expectations.
Perhaps, instead of trying a slight variation on the failed policies of the past, Maine should do something bold.
Such as: deregulation.
You know, a little free enterprise. Sell spirits the same way beer, wine and almost everything else is sold. No wholesale monopoly.
No state control over retail prices.
Maine could still make decent money off alcohol by licensing wholesalers (there could be several, as many as the market would bear), licensing retailers (who’d be able to offer discounts that would make them competitive with New Hampshire – and each other) and collecting taxes (just as it does now).
Since that sort of reform would retrieve much of the $20 million in annual profits that cross the border, it could boost the state’s retail sector significantly, as well as providing a nice bump in state revenues.
The neo-prohibitionists will wail about how such a program will result in more consumption of intoxicating beverages. The reality is that it would only result in increased imbibing of locally bought booze.
Because that 58 percent that claimed they never shopped for liquor in New Hampshire would finally be telling the truth.
Raise a glass of Courvoisier VSOP cognac ($39.99 for 750 ml in Maine, but only $36.99 in New Hampshire) to my plan, and then email your regards to aldiamon@herniahill.net.
Entries(RSS)
Well, considering the price we all pay for the drunkards any way perhaps we all would be better off without them traveling to NH and back.Let them buy it closer to home mabeythe price will deter some. We all pay the price whether we drink or not.Drunk drivers kill every day in this state .Its one thing to kill them selves but usually its innocent people in the wrong place at the wrong time. It costs employers in lost productivity and work place accidents, it costs families due to addiction, child /spouse abuse financial troubles.The cost to care for alcohol related illness taxes our health care system. .Alcohol is not really a winning business for any state..Let them pay the high Maine price and stay home and swill it down.Responsible drinkers Ha Ha! where are they? now throw some butts and medical reefer in and we got a trifecta .
Sorry Al:
A ten spot is only going to cover gas and tolls if you live within walking distance of the New Hamphire border. Unless you're stocking up for you and your friends or you're passing through NH on your way to someplace else, trips to NH liquor stores are not cost effective. I like the deregulation idea.though.
Thinking that Al was buying gas and paying tolls in 1972 -- hoping the day comes when I can get to NH and back for $10 sometime before well --- 2020.
"Or to put it another way, Maine Beverage took Maine’s suckers (translation: taxpayers) to the cleaners." What a typical and contemporary response. The connotation here is that one took unfair advantage of another. The simple fact is there was a void and someone recognized it. If Augusta had simply done their homework (or hired someone to do it for them in the form of a feasability study) it is unlikely Maine Beverage (or anyone else) would have ever been granted a contract.
Maine Beverage's role in the Maine liquor game is surprisingly limited. Pine State Trading is contracted by Maine Beverage to warehouse, pick and deliver their product. Despite this partial involvement, Maine Beverage achieved a $37 million dollar profit last year. Given this information, replacing Maine Beverage with public employees seems to make sense at the present. In spite of the inherent inefficiencies associated with State government, Augusta should be able to realize a healthy profit as well as reduce prices, thereby limiting sales losses to New Hampshire.
Don't drink so done care, if you know that much about price differences you must drink alot.
How does this effect the sales from Maine's distillers? The craft distillery business is growing in Maine, not to mention the producers of Orloff Vodka in Lewiston. Do these distilleries have to sell their products to the Mass Liquor Monopoly, only to sell it back to Mainers? I bet they do. I would think that a "pro-business" gov would have done something about that day one. The State house legislators should have done something about that day one as well, but it must not profit for them. Something's fishy in this whole deal.
The liquor sales are only the tip of the iceberg. While people are being drawn there for the liquor, they're also usually shopping for other stuff while they're there. They can save $30-$50 or more on a flat screen TV simply by shopping at the New Hampshire Walmart or Best Buy and avoiding Maine's sales tax. There's a reason Walmart regularly builds within 5 miles of the border on the New Hampshire side, but rarely within 20 miles on the Maine side. Unlike most politicians, they understand common sense. People living further than 20-30 miles from the border usually multi-task with their shopping, stocking up on cigarettes, booze, etc. while people closer don't have to. $20,000,000 doesn't begin to cover the loss.
When Maine tried deregulating before, the large retailers, like Hannafords and Wal-Mart were able to lower their prices enough to divert the business away from the smaller local businesses.
Maine used to be a dry state. What if we went back to that, and raise the tolls on the turnpike to compensate for the revenue loss?
Less booze, fewer tourists fewer drunks. As an added bonus, maybe Al's writing would improve!
Al, You should check your facts more closely. $10 will buy about 2 1/2 gallons of gas. Figure 20 mpg. That's 50 miles, but as it is a round trip you would need to live 25 miles from the nearest NH liquor store. That's a pretty small piece of Maine.
On the other hand you missed the fact that, under current state laws, residents of Maine cannot have wine shipped directly to their homes. So if Maine Beverage doesn't carry it, you can't get it. 31 states currently allow private individuals to have wine shipped to them. Not here. I find the liqueur laws in this state regressive, to say the least. New Hampshire here I come!!
As for all you wing nuts that think that anyone who goes to New Hampshire to buy booze is an alcoholic, or worse, get a life. I am lucky enough to live within 60 miles of New Hampshire so if I only make two trips a year and stock up, I can save a bundle. Which is very helpful when you are retired and on a fixed income.