AUGUSTA — State liquor regulators are expected to vote Tuesday to raise the price of dozens of brands of alcohol, including the popular “nips” bottles that were the source of a legislative showdown between Gov. Paul LePage and state lawmakers this year.

Prices for some of the most popular nips brands, such as 50-milliliter bottles of Fireball Cinnamon Whiskey, are expected to increase by about 50 percent, going from 99 cents to $1.49 each.

The price of popular brands of "nips," sold in 50-milliliter bottles, are expected to go to $1.49 from 99 cents, but 1.75-liter bottles of "value brands" won't cost $6 more as once proposed. Staff file photo by Michele McDonald

The higher prices are designed to capture more profits for the state from increased liquor sales. Since 2015, sales have increased by nearly 14 percent, but the state’s profits have gone up less than 4 percent.

Despite the desire to increase profits, however, state regulators have abandoned a proposal to raise prices by as much as $6 a bottle for the largest-sized, 1.75-liter bottles of what the state calls “value brands,” as detailed in a memo leaked to the media in July.

Gregg Mineo, director of the Bureau of Alcoholic Beverages and Lottery Operations, said the agency is backing away from the steepest price increases in reaction to feedback from liquor brokers and producers.

In an email Monday, Mineo said the formula going to the State Liquor and Lottery Commission on Tuesday limits the maximum price increase on any of the value brands to $1.

Among those who objected to the steeper price increases on products, such as Orloff Vodka, was the Maine State Chamber of Commerce. It said raising the price to $15.99 on the largest bottle of Orloff, a top seller in Maine, would simply drive more customers to New Hampshire or even Massachusetts. In those states, comparable products sell for $8.99 and $9.99, respectively.

“This provides the consumer a significant incentive to drive to neighboring states to buy their spirits,” Dana Connors, the chamber’s president and CEO, wrote in a letter to the alcohol bureau.

Maine signed a new warehousing and trademarking contract with Pine State Vending in 2013 that produced significantly more revenues for the state and made Maine prices more competitive with New Hampshire’s, but those gains would be undone by the proposed price increases, Connors said.

Liquor sales have increased, partly as a result of more aggressive marketing and pricing, in large part because of an enormous expansion in the number of retail outlets. However, profits to the state have not kept pace.

In 2015, the state sold about $155.5 million worth of alcohol and earned a profit of about $46.1 million. For the fiscal year that just ended, sales grew to $176.7 million but the state’s profit was only $47.7 million, Mineo said.

“Any business manager, it doesn’t matter who you work for, is going to see this and say, ‘What’s going on? This doesn’t seem right,’ ” Mineo said.

Driving increased sales are new marketing efforts, including about $1 million a year in newspaper, radio and television advertising that highlights special deals on various products each month. At the same time, the number of retail outlets that sell liquor has gone from 154 in 2004 to 533 this year.

Not only are there more places to buy alcohol, but often those outlets are open longer hours than the state’s previous system of state-run liquor stores, Mineo said.

Yet even with its increased sales, Maine is still far from putting a dent in New Hampshire’s liquor business, according to records of the New Hampshire Liquor Commission. In 2016, liquor sales in New Hampshire hit $678 million, up $36 million from the year before and more than four times Maine’s sales number for that year. The sales returned about $155 million to New Hampshire’s general fund in 2016.

Mineo said many of the reactions from suppliers to Maine’s proposed price changes were “visceral” and were in response to what was initially just a proposal. He said he is confident that by making only small price increases for its value brands, Maine will not erode its sales.

Mineo said “very strong organic growth” for key brands, including Fireball and Tito’s Vodka, was a factor in driving sales up in Maine.

“These brands are doing great, and every state that has these brands listed, and by the way they all do, they are benefiting from it,” Mineo said.

The commission meeting will begin at 10 a.m. Tuesday at the alcohol bureau’s offices in Hallowell.

Scott Thistle can be contacted at 791-6330 or at:

sthistle@pressherald.com

Twitter: thisdog

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