CUMBERLAND, Maine — A successful Maine businessman has formed a new company to compete for the state’s lucrative wholesale liquor distribution contract.

Ford Reiche, former president of Safe Handling Inc. in Auburn, announced on Friday the formation of a new company, Dirigo Spirit, that will compete for Maine’s liquor contract, which the state plans to renegotiate over the course of the next year. The state’s 10-year contract with Maine Beverage Co. is scheduled to expire in June 2014.

The business plan for Dirigo Spirit has been in the works for a year, Reiche told the Bangor Daily News. He legally formed the company in February, according to public documents from Maine’s Bureau of Corporations, Elections and Commissions.

Reiche was in Augusta on Friday observing as Gerry Reid, director of the Maine Bureau of Alcoholic Beverages and Lottery Operations, and Sawin Millett, commissioner of the Department of Administrative and Financial Services, briefed the Legislature’s Appropriations and Financial Affairs Committee on the state’s plan to renegotiate its liquor contract and attempt to regain a larger piece of the revenue pie. The plan was “uniformly praised by everyone who spoke on the appropriations committee,” Reiche said.

Under the current liquor contract, Maine Beverage Co. paid the state a lump sum of $125 million in 2004 to take over the warehousing and distribution of liquor in the state. The contract has proven to be much more valuable than that and the state now is trying to increase its cash flow with a renegotiated contract. Reid, from the Maine Bureau of Alcoholic Beverages and Lottery Operations, said at Friday’s appropriations committee meeting that the state’s new plan could increase annual revenue by $29 million, according to the Sun Journal.

The responsibility of warehousing and distributing every bottle of liquor sold in Maine would be a job not unlike what Reiche oversaw at Safe Handling, which he grew into an $18 million transportation and logistics company that moved materials such as chemicals for the paper industry and ethanol. Reiche sold Safe Handling in 2009 to a Utah company. Whether liquor or liquid fuel, both would involve warehousing and transporting goods within a highly regulated environment, Reiche said.

“It’s very familiar territory for us,” Reiche said.

There are at least five interested parties that Reiche knows of that are interested in competing for the contract, but he said Dirigo Spirit has a head start on most of them.

“We’re the ones who have been publicly working on this the longest,” he said, “except the incumbents.”

Despite its name, Maine Beverage Co. is not a Maine-based company. It’s a partnership between the Martignetti Cos. of Norwood, Mass., and New York-based private equity group Lindsay Goldberg. It subcontracts the work to Augusta-based Pine State Trading Co.

Reiche said the Dirigo Spirit plan will capture more of the revenue that’s flowing to an out-of-state distributor and New Hampshire stores. His plan calls for more financial and operational transparency, more collaboration with in-state liquor retailers and other stakeholders, and better competition with New Hampshire.

“I knew about the contract, and as a Mainer was unhappy about the arrangement,” Reiche said.

A major topic of discussion at Friday’s meeting was the loss of revenue to New Hampshire, which attracts many Mainers who want to buy liquor without the sale tax, Reiche said.

Mainers pay retail prices that are between $2 and $7 per bottle more than paid in New Hampshire, a price difference Reid said Maine plans to reduce to capture more of that lost sales revenue, according to the Sun Journal.

“We would close about two-thirds of the retail price premium, which would take away a tremendous amount of the incentive for people to buy across the border,” Reid said.

Reiche called the loss of revenue to New Hampshire “an untapped resource,” which he looks forward to tapping if his company is successful in its contract bid.

“Nobody anticipates that [the price difference between Maine and New Hampshire] could be completely overcome, but Maine has done very little to compete with New Hampshire so anything we do will be more than we’ve done so far,” he said.

Whit Richardson

Whit Richardson is Business Editor at the Bangor Daily News. He blogs about Maine business, entrepreneurs and the economy.

52 replies on “Maine company forms to bid on lucrative liquor contract”

  1. With the price of fuel buying  in NH only makes sense if you are going by or live nearby. I suppose you might offset fuel costs if you bought enough. Regardless, bringing down the price in Maine will increase sales.

  2. Maine Beverage paid the Baldacci led state of Maine $125M and has recieved a profit of approximately $37M per year since 2004.
     When this sweet deal ends, our state will have turned over to democrat insiders more than $245M.

     And the democrats of this state wonder why the republicans were voted in ????

    Also, some interesting insight from 2005;

    http://www.portlandphoenix.com/features/this_just_in/documents/05011028.asp

    Severin Beliveau
    Larry Benoit
    John Baldacci

    These names keep coming to the surface of a very fetid swamp.

    1. Thanks for providing the link for this story.  What a scam this whole deal was! 

      At least Peter Mills changed the deal to 10 years–although even that seems too long. 

      This story shows just what that Baldacci bunch of hoodlums was up to.  I’m no fan of Paul LePage either, but that is not what this story is about (although it soon may be). 

      I do wonder though if this Maine Beverage outfit created the profits mentioned in the article because they did some creative marketing, kept their staff numbers low, and just managed the whole operation better than the State of Maine ever could?  If so, another sad commentary on how the State of Maine operates.

    2.  Thanks Yowsa..great link and very instructive..another example of what I call the Banana ism of Maine..giving it away to corporations.  Also another example that this is deeply imbedded in our legislative culture..not something that will be cured come Nov 6 unless we only elect people who are committed to ending corporate giveaways in Maine.

      It has been going on for decades in both democrat an republican controlled administrations.

      Simple public policy.

      No privatization contract should ever be sole sourced or negotiated.  Competitive sealed  bidding always.

    3. “When this sweet deal ends, our state will have turned over to democrat insiders more than $245M.”

      And when the next deal ends our state will have turned more than $245M over to republic insiders. State government needs to reestablish the distribution monopoly and reopen the State Liquor Stores.

  3. Who would think to pin the original tale of this donkey of a deal where it belongs?
    (Not the Bangor Deadly).

  4. no please. 
    no more corrupt private businesses being legislated exclusive rights to the liquor distribution in maine. it was a bad idea then, and it’s still a bad idea.

    baldacci sold the rights to his buddy in Massachusetts and his friends on wall street. 
    and since then we’ve all paid for it.

  5. I’m looking for investors in my new Dirigio Snake Oil and Patent Medicine Co. so we can try to win this contract.

  6. I understand the liquor contract years ago was done to help the State pay off bills left behind by the King Administration billion dollar mess.  I’m sure the winning contract bid knew we were hard up so we sold out for less than we could have gotten.  I don’t trust this current LePage Administration any more with the process.

    1. The failed Baldacci administration and the inept Dem legisvermin sold it to connected Dem insiders at a loss of at least $200,000,000 to the taxpayers.  Where’s that joke Farmer explaining why the failed Baldacci administration, which he was a part of, screwed the taxpayers and GAVE the liquor business to a Baldacci campaign contributor and his Wall Street buddy?

      Why do you think Dem Libby Mitchall got 19% of the vote in the last election. Baldacci, Violette the Turnpike thief and McCormick, who was inept at best and criminal at worst, are prime examples of how the Maine Democrats “look out for the people of Maine”.

      1. No difference than the current LePage Administration who just appointed a man to the State Board of Education who did nothing to report a pedophile and the current Speaker of the House defrauded MaineCare out of millions of dollars. Also passing a bill that allows the doubling of peoples insurance rates so Insurance companies make huge profits accross this state.
        Subject: [bdn] Re: Maine company forms to bid on lucrative liquor contract

      2. ” legisvermin”..great word..did you make that up?

        how about “legimoles”..they never seem to see what is really going on..

        how else do you explain how easily our joint committees fall for these half baked ideas that sacrifice the public interest for corporate profit..?  The Gold Mining bill is another recent example or pure trash being pedaled by corporate interests an dour legislators falling for  it for it hook line and sinker..

        We shoul start a ranking system for our legislators and committee chairs awardig “legivermin”, “legimole” points for every piece of trash legislation supported ..and keeping a running tally live up for everyone to see every day.

    2. so what do we do, just leave it as it is? you don’t trust the lepage? of course not, why would you? he fished out the crooks at the maine turnpike authority. maine state housing authority, is paying down some of the states overdue bills to the hospitals, etc etc etc, of course not why would you trust him? i have an idea, why don’t we just call up angus king who left the state in a billion dollar shortfall and is bilking the electricity payers with his cronies involved in the windmills, and have him run for governor again instead of going to washington with all the other crooks that are there like baldacci! geezzzz! and they vote!

      1. I don’t trust any politician especially when only in Maine a Governor can appoint a person to the Board of Education that did nothing to report a pedophile in Bangor and the the Speaker of the House defrauded MaineCare out of millions.
        Subject: [bdn] Re: Maine company forms to bid on lucrative liquor contract

        1. shall we start digging out all the cronies that Baldacci and king appointed while they were in office? I don’t think we want to start with that stuff cause it may cause more embarrassment to the d party. what lepage did with beardsly is not one of his smarter moves. we are talking about money here not appointments. stay on the topic at hand!

          1. That’s what I’m trying to say. If this contract gets awarded under LePage it will go to his friends just like it happened under the prior Governor.
            Subject: [bdn] Re: Maine company forms to bid on lucrative liquor contract

          2. I don’t believe it. while he is trying to save the state taxpayers money, his predecessors were running up the tab deficit. you can not paint all governors with the same brush.

          3. Stop drinking his koolaide. Where are the jobs he promised? All he does is attack workers in favor of businesses and tax breaks for the wealthy. You must be wealthy.
            Subject: [bdn] Re: Maine company forms to bid on lucrative liquor contract

          4. not sure what jobs you are talking about he promised but I think the unemployment rate is going down about as much as the federal rate so no better than anyone else. what is wrong with a for profit company running the liquor business as long as the state gets their share? in the Baldacci deal, he sold the taxpayers down the river for nothing but his friends and you can bet he got the best out of the deal just like angus. lepage did not even have to say anything and just re sign the deal and no one would have know about it right? he is doing a lot more for this state than any other governor has done in a long time! you can’t accept the truth can you that he is at least paying some of the state’s overdue bills like the hospitals and cleaning the scum democrats like violette and McCormick out of Augusta and I am sure there will be more to come. why didn’t the other governors have the gonads to stand up to these crooks and get them out of there? because it was all part of the good ole boys club. you can’t accept what is going on down there. have you ever worked for a poor man? poor men do not employ people because they do not take chances to be in business to give jobs to people. I have no problem with taxing those making over 250k per year but the tax breaks he has just given are to those much less than that, check your numbers. you are one of those that just can’t accept that he is cleaning up Augusta and putting us on to the road to prosperity unlike what has ever been done before like the previous administrations borrowing from the state pension plans to make the budget. if they would not have sold the liquor business for nothing the state pensions would not have been in the shape they were in when he took office. he is making sure what is happening in Washington at 16 trillion dollar deficit does not happen here! put that in your pipe and smoke it!!

          5. I can take it if it was actually happening. Ask people who are paying twice as much in health insurance as they were two years ago just so LePages friends in the insurance industry can make millions. He’s created a job for his relatives that is it. No he didn’t borrow from the Pension plan he just broke the promise those people had so it was the same thing as stealing it. It is amazing he can pay the promises to the hospitals yet screw the retirees from their pensions but of course he had to screw the retirees to pay for his tax cuts to the rich. You don’t steal it from one to give to another. Robin hood in reverse. Stop drinking the right’s koolaide. After November he’ll be a lame duck and out in 2014 I pray.
            Subject: [bdn] Re: Maine company forms to bid on lucrative liquor contract

          6. I feel sorry for you. I really do. it is due to people like you that vote is the reason this country and state are broke. this did not happen since lepage became governor. hello have you taken off your blinders and looked at other states and see what they are paying for health insurance? have you noticed that individual policies have dropped this year, the first time in over 20 years? the reason health insurance is so high is because the state has not been paying the hospitals for millions they have provided in Medicaid coverage for years. who do you think has been paying for those people that work in these places and paying the associated bills it take to run these places? my god, what planet do you live on? you surely don’t own a business. this is like peeing in the wind, it is hopeless to even begin to try and explain this to you. and you vote to boot! se are doomed!

  7. Is there anyone out here who is still naive enough to think that the price of a jug of Allen’s is going DOWN because of this “new deal”? More than likely, someone will be getting a bigger yacht. That 100′ skow is getting to be an embarrassment down at the yacht club.

  8. Maine owned, Maine built and jobs for Mainers.  Now the Dems will complain about this just being another 1% making a living off the backs of the middle-class.

  9. Why is Maine in the liquor distribution business in the first place?  Maine is on a very short list of states that controls the warehousing and distribution of liquor.   I suspect Maine could more than recoup revenues through sales taxes and higher volumes of liquor sales resulting from lower prices.  

      1. Why is there no mention of how many alcohol related deaths occur each year?  This is all about greed and shows what people will do for a buck. 

        1. if you think decreasing the cost of liquor a few dollars a bottle will incredibly drive up alcohol related deaths you are a fool. People who wanna drink will drink. There are reasonable laws in place concerning driving, possession, consumption, transportation, sale, and public use of alcohol. 

      2. I believe Gov. LePage campaigned on getting the state out of the distribution (control) business, but I guess he can’t convince the nannies in the legislature….

  10. It sure looks like someone has some inside info on a contract if they are starting a year early.As far as lowering the price anything the state has tried by combining services has resulted in zero savings,just more people on the ever growing payroll  

  11. Three cheers for John Baldacci. Dumping a few hundred overpaid, under worked liquor store employees off the state payroll was one of the better things he ever did.

    1. so, you agree with him selling the exclusive rights to liquor distribution in maine to a private company at a massive loss to the taxpayers?

      what he did was a form of corrupt crony capitalism and corporate fascism.

      the merger of state and corporate power = fascism.
      so, he forced the people BY LAW to use a particular distributor.
      you’re okay with that?

      it’s no wonder we’re in the mess we’re in now.
      people like you, voting in corrupt sleazy politicians over and over.
      “oh but he’s a great man, charismatic speaker, he says what we want to hear”
      while they stab us in the back and rob us blind.

      1. Massive loss to the taxpayers? I doubt it, but at any rate every dime that didn’t go into the state coffers is a dime that didn’t end up in the pockets of the welfare parasites. The best way to kill a tumor is to cut off its blood supply.

        1.  … because as we all know, state funds are used for absolutely nothing else but social aid programs.

          Great Caesar’s ghost, you cannot really believe that.  Never mind your callous dismissal of an entire segment of the population as “a tumor”.

          1. Tumor: Useless tissue characterized by uncontrolled growth.
            .
            Just what better metaphor for government could possibly exist?

      2.  Let me know when someone other than a “corrupt sleazy politician” is available on the ballot and I’ll be sure to vote for him.  HINT: It’s never happened yet.

  12. It would  make sense for the government to regain control of this lucrative business?   Why was it sold in the first place?   Making this a private sector operation was a very bad idea.   The government needs the money.

    1. it was sold by baldacci to his friends from massachusettes and on wall street.
      they were awarded it in a 125 million dollar, no bid legislated contract.
      baldacci wanted to sell it away indefinitely, but a legislator at the time stood up and so they instead changed it to ten years.

  13. Why would New Hampshire be able to sell the same spirits at a lower price than Maine. I kinda think it might be to the fact of less palms having to be greased before the sale.

    1.  Last I knew, there wasn’t any sales tax in New Hampshire.  That could have something to do with it.

      1.  part of it but liquor is 2-3 dollars cheaper a bottle up to 7 for certain and promotional products.

        Probably one of the things I miss most about living in NH is cheap booze!

      2. You have to actually read the article and comprehend it a bit before making comments my friend. I got from the article that the state just wants to negotiate a new contract just so they get more revenue and the price of liquor will stay the same or go up. Mainers aren’t going to New Hampshire just to save sales tax.
        ” Mainers pay retail prices that are between $2 and $7 per bottle more
        than paid in New Hampshire, a price difference Reid said Maine plans to
        reduce to capture more of that lost sales revenue, according to the Sun
        Journal. “

        1. I don’t see where I asserted that was the only reason.  In fact, you might’ve been able to infer that it isn’t from the phrase “something to do with it”.  Speaking of reading comprehension.

  14. Drop the prices on cigarettes to match NH also, you’d be surprised how fast sales go up.  No one quit, they just drive farther & buy in bulk.  Maine is still paying their healthcare costs so no benefit is being accrued.

  15. If the liquor contract is so lucrative that people start businesses just to have a shot at bidding on it, shouldn’t a prudent cash-strapped State government look long and hard at reestablishing the distribution monopoly that the state formerly held instead of giving that revenue to politically connected insiders?

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