Days after failing to ban the sales of nips, state regulators are imposing a 50 percent price hike on most of the increasingly popular single-sip liquor bottles.
Regulators announced a new plan that would dramatically increase the price of nips as well as many other cheap bottles of spirits on Oct. 1.
Regulators said they intend to adjust pricing to create a new “value” category with minimum price markups that insiders said will escalate the price of many individual bottles. It covers nearly 1,000 products.
Nips that have been selling for 99 cents apiece — including the Lewiston-bottled and bestselling Fireball Cinnamon Whisky — will sell for $1.49 under the new pricing scheme.
The price increases on lower-end spirits will push up the cost to consumers by 20 to 50 percent on any given bottle covered by the new edict. Larger 1.75-liter bottles covered by the new edict, for instance, would see a $2.50 increase, a hit to many consumers.
The move follows the rejection last week of a ban on the sale of nips sought by Gov. Paul LePage, who warned legislators that if they approved a measure instituting a nickel deposit on the 50-milliliter bottles, he would press regulators to de-list nips from the state’s approved products. They overrode his veto, so LePage sought to make good on his threat.
Nips are the fastest-growing spirits product in Maine and many other states, and are responsible for a surge in sales and state revenue. A Lewiston plant owned by the Louisiana-based Sazerac Co. is the chief beneficiary of the soaring sales because of Fireball’s popularity.
Gregory Mineo, director of the Bureau of Alcoholic Beverage and Lottery Operations, said last week that the 6.5 percent overall annual growth in spirits sales in Maine indicated “a very, very healthy” financial situation for the industry and the state.
Liquor distributors learned of the pricing change in a Friday afternoon email from Tracy Willett, manager of liquor operations for the Bureau of Alcoholic Beverage and Lottery Operations.
“This change is a result of the conversations from last fall on a general concern that the state’s profit was not proportional to our sales growth” in the liquor market, Willett said.
She said in the email that “expected cost associated with the passage” of a nickel deposit on nips, which begins in 2019, and an increase in growth incentives for agency liquor stores have created new “costs and concerns” that have to be mitigated by more revenue.
The money worries mentioned by Willett stand in sharp contrast to the glowing picture of the Bureau of Alcoholic Beverage and Lottery Operations’ successes delivered by Mineo during a well-attended hearing last week where the liquor board voted 4-1 to reject the proposed ban on the sale of the 50-milliliter nips in Maine.
“We think things are clicking,” Mineo said at the hearing. “It’s been a great year” with record profits for stores and the state.
The “Notification in the change in Maine’s pricing formula” sent out by Willett kicked off a 10-day comment period that precedes a mandatory 60-day notification of changes in the prices of spirits allowed for sale in Maine.
Willett’s email noted that the threshold for what’s covered by the value category includes any 1.75-liter bottles priced at less than $22, any liter bottles priced at less than $13, any 750-milliliter bottles priced at less than $12 and any 375-milliliter bottles priced at less than $7.
Willett mentioned that the bureau plans to use some of the additional profits from charging more for value spirits to offer more money for price supports on promotions for featured products.
“We look forward to working with suppliers to determine how to best make these reinvestments,” Willett said.
Efforts to reach Mineo and the state’s major liquor brokers were unsuccessful over the weekend.