Bangor distributor among 4 vying for state liquor contract

AUGUSTA – A Bangor warehousing and distribution company is among four firms seeking an exclusive $125 million, 10-year contract to run the state’s wholesale liquor business.

In addition to Reid’s Distribution Center, bids were submitted by Mainecentric of Auburn, Maine Liquors of Augusta, and Martignetti Co. of Norwood, Mass. Of the four firms, only Martignetti is currently engaged in the liquor distribution business, with operations throughout the New England states.

Reid’s Distribution Center filed its incorporation papers with the state only on Tuesday. James A. Dufour, a Bangor lawyer serving as an agent for the company, said it is an affiliate of the Bangor-based Reid’s Confectionery, which already has established a statewide distribution network for its tobacco and candy products.

“This wholesale liquor business would fit in very well with the existing statewide distribution routes,” he said Thursday afternoon. “We would, in large part, be using existing warehouse space at the Reid’s Confectionery warehouse in Bangor and we would also be sharing some warehouse space in the Portland area” for servicing the southern end of the state.

Robert Nagle, chief financial officer for Reid’s Confectionery, would assume a similar role for the distribution center and Randy Lloyd, another executive at the confectionery firm, would oversee operations for the new venture. Dufour said if Reid’s was successful in securing the contract, additional jobs would be added to the company’s work force.

“It’s on a pretty fast track,” he said. “We have to be ready by the first half of 2004, so we’ll need to put those jobs in place fairly quickly in the Bangor area.”

Under the terms of the state contract, the successful bidder has to deliver $75 million to the state before the current fiscal year ends on June 30, 2004. The $50 million balance is due the next day.

Earlier this year, the Legislature approved Gov. John E. Baldacci’s plan to sell or lease the state’s long-held liquor distribution franchise to a private entity for at least $125 million and to book that amount as revenue in the state’s current two-year budget cycle.

At the time, Maine was facing a $1.2 billion budget deficit between projected state expenses and anticipated revenues. Baldacci identified the liquor proposal as a key component of his overall strategy to close the budget gap without raising new taxes.

Under the 10-year lease arrangement, the state would forfeit the profits it would have earned over the life of the lease in exchange for an upfront payment of at least $125 million. Maine would continue to collect and regulate taxes on liquor sales under the plan. Liquor consumers in Maine are supposed to notice no difference under privatization.

State officials have speculated that prices could actually decrease because the state would no longer support the infrastructure of the former state liquor store system. The payroll costs to cover the old system’s employees – a work force that numbered more than 100 only a few years ago – has also been booked as a savings. The last four remaining state-operated liquor stores – in Bangor, Ellsworth, Rockland and Brunswick – closed Nov. 29.

The state Department of Administrative and Financial Services released the names of the four bidders Thursday afternoon. The proposals will be sequestered for the next six weeks while state officials evaluate the bids. The winning bid is scheduled to be awarded Feb. 4, with the final contract to be executed on March 19, and the winner taking over operations on July 1.

It is likely the state will receive more than $125 million, because each bidder is encouraged to “propose a revenue-sharing mechanism to benefit the state” in an effort to set itself apart from the other competitors.

In setting up the bid criteria, the state said it would score proposals based on 40 percent for quality of service, 25 percent for financial plans, 25 percent for filings, and 5 percent each for revenue-sharing and references.

Liquor in Maine is now sold through about 300 agency stores licensed by the state. The winning bidder would assume responsibility for warehousing, taking liquor orders, making deliveries, and collecting payments from all the agency stores.