May 21, 2018
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Bottoms up: What’s behind Maine’s liquor price changes

By Darren Fishell, BDN Staff
Updated:

PORTLAND, Maine — The Maine Bureau of Alcoholic Beverages and Lottery Operations is changing how it determines its cut of liquor sales in Maine, which means price changes Feb. 1 for hundreds of products, including some of the ones most commonly sold.

Among the top 215 liquors, by brand and bottle size, the largest percentage decrease will come for Five O’Clock Vodka’s 375-milliliter bottle. The shelf price at all stores in Maine is set to drop 25 percent, from $6 to $4.49, according to state data showing price changes for the 215 highest-selling items.

On that list, Five O’Clock’s 375-milliliter offering is near the bottom, ranked at 210th by cases sold.

The most popular liquor that will experience a price change is Orloff’s 1.75-liter bottle, which will rise by 50 cents to $13.49.

The state’s most popular liquor, Allen’s Coffee Brandy, won’t change in price for all but its 375-milliliter size, which will jump 50 cents, to $6.49.

Most of the thousands of products that hit the shelves won’t see any change in price, however. Prices for more than 2,000 items will stay the same. Prices will decrease on 666 items and rise on 589 others.

The changes are part of a long-planned switch in the state’s liquor merchandising system, putting Maine’s pricing to suppliers in line with New Hampshire and Vermont, according to Tim Poulin, deputy director of Maine’s Bureau of Alcoholic Beverages and Lottery Operations.

The new pricing system sets a standard markup for spirits across a certain category, delivering a profit to the state.

For instance, all 1.75-liter bottles of brandy come with a standard markup per case. In the vodka category, Poulin said different brands and sizes came with widely varying profit margins to the state, which will be standard across all competing liquors under the new system.

“This was not intended to do anything with pricing,” Poulin said.

Among the top 215 best-selling items, the average price on Scottish whiskey is set to drop the most, by 50 cents, while cognac will jump $1.

Poulin said that change has been in the works since the state restructured its liquor business and awarded the business to another company last year, changes that weren’t possible under the previous contract.

The previous contract split profits between Maine Beverage Co. and the state and had the contractor handle warehousing. The state now manages warehousing and collects the profits of sales, giving a set fee to contractor Pine State Trading Co., which markets liquor in the state under the name Maine Spirits.

Behind the scenes, the change in pricing means the state will take a hit of approximately $1.7 million based on case sales from the past calendar year, Poulin said.

“Some might argue that $1.7 million is a lot to spend, but we now have predictability and consumers are getting a better deal,” he said.

That more competitive pricing, he said, also seeks to improve Maine’s competition with New Hampshire, where the absence of sales tax draws an estimated $30 million to $40 million away from Maine in revenue each year.

“I think that people are figuring out that we’re being competitive,” Poulin said, citing a 4.3 percent growth in the state’s liquor business last year.

On average, he said, shelf prices across all products are dropping about 50 cents. At the same time, the average price the state pays across most bottle sizes is set to rise by about $1.24 per case, based on just the top 215 best-selling items.

Except for special offers, retail prices for liquor in Maine are updated for all stores every three months.

Poulin said the retail price changes taking effect in early February align with typical price fluctuations every quarter, but the new system of negotiating will leave some period of adjustment for suppliers.

That was the case with percentage decrease leader Five O’Clock Vodka, which decided to take a $17.53 cut per case — to $49.47 from $67 — in order to lower the shelf price of the 375-milliliter bottle by $1.50.

Sazerac Co. decided to take $12.89 less per case on its small 50-milliliter bottles of flavored Fireball Whisky to keep the retail price at 99 cents.

“Nobody got to see what the competition was doing,” Poulin said. “So for the May quarterlies, we expect that some of the suppliers are going to see where the competition is and there may be some adjustments.”


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