AUGUSTA — The state’s wholesale liquor business is up for grabs to the lowest bidder.
The contract to administer and provide trade marketing for the state’s hard liquor business could be worth more than half a billion dollars over the 10-year contract.
The state is looking for a company that will share more of the profits than its current arrangement with Maine Beverage Co.
That company won the right to distribute liquor to state agency stores in 2004 when the state signed a 10-year lease with the company for a $125 million lump-sum payment and annual revenue-sharing, which gave the state another $8.7 million a year.
Maine Beverage, meanwhile, made $45.8 million a year after it covered its operation costs, according to a release issued by Gov. Paul LePage on Friday.
“The current contract has cost Maine hundreds of millions in lost revenue,” LePage said in a prepared statement. “These new contracts will allow the state of Maine to take back the significant revenue created by the spirits business and provide a better deal for Mainers.”
The contract change is expected to double the state’s share of the profits on booze.
Maine is one of only 17 states in the U.S. that control the sale of hard liquor within its borders.
Part of the additional revenue the state would receive under the new contract will go to pay off bonds the state issued to pay $183.5 million owed to 39 hospitals for services provided to patients covered by MaineCare (Medicaid) health insurance.
“The governor’s plan represents a vastly superior spirits wholesale-services strategy and business model than the current contract,” said Gerry Reid, director of Bureau of Alcoholic Beverages & Lottery Operations.
“By recovering lost revenue that resulted from leasing the business and removing the 36.8 percent gross profit guarantee that existed in the old contract, Maine consumers will get a much better value from these contracts than they have previously.”
LePage’s plan also calls for the reduction of retail prices for hard liquor sold in Maine, Reid said.
He has said previously that reducing Maine’s retail prices would allow the state to recover a portion of the sales it loses to New Hampshire each year.
As outlined in the state’s request for proposals, the bureau is seeking bidders to provide spirits administration and spirits trade marketing. Interested vendors can bid on one or both contracts, according to the release.
At least one Twin Cities-based businessman was preparing to bid on the contract.
Ford Reiche said Friday his team has been working on a bid for about two years and praised the state for its “well-prepared proposal.”
“We intend to submit the proposal that will be the most compelling for the state,” Reiche said.
He said he knew of between six and seven companies that were likely to compete for the contract. But the new contract would not be as lucrative as the deal Maine Beverage enjoyed, he said.
“I think those days are over,” Reiche said. “The state, with this proposal, is now positioned to get the best possible deal it can.”
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