Politics & Other Mistakes: Drunk money
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 email@example.com.