AUGUSTA — Tiny liquor bottles are at the center of a growing political debate in Augusta involving millions of dollars in revenue, more than 100 jobs, and litter.
One day before Gov. Paul LePage threatened to remove the miniature liquor bottles from store shelves in a disagreement over the costs of a recycling bill, the CEO of the producer of Maine’s most popular brand of “nips” had told a legislative leader that such a move would have a “drastic impact on our company and our employees.”
Read the CEO's letter
Sazerac Co. chief executive Mark Brown wrote that he was withdrawing his support for a compromise on a 5-cent deposit on nips after hearing that LePage would threaten to end sales of the 50-milliliter bottles in Maine. Brown’s May 15 letter to Senate President Mike Thibodeau, R-Winterport, contrasts with LePage’s assertion that a 5-cent deposit under consideration by the Legislature would increase business costs and “put the state’s financial health at risk.”
“While we could have lived with a 5-cent redemption sticker if the state really thought that would solve the littering problem, we can no longer support the legislation while under the threat of having 50 mls delisted,” wrote Brown, whose company produces Fireball Cinnamon Whiskey, which accounts for more than 40 percent of nips sales in Maine. “Such a move would be detrimental to the state’s finances as this is one of the fastest-growing sectors in Maine.”
Sazerac employs 130 people at its Boston Brands facility in Lewiston – formerly known as White Rock Distillery – where workers finish and bottle Fireball and other spirits.
Lawmakers are considering a bill, L.D. 56, that would require retailers, beginning in 2019, to collect a nickel deposit on every 50-milliliter bottle as a way to encourage recycling. Sales of the miniature liquor bottles – and particularly Fireball – have soared in recent years, but so has roadside litter by people who toss back a drink and then throw the empty nips out of the car window or to the curb.
On Tuesday night, LePage issued a statement vowing to veto the 5-cent deposit bill and to instruct the Maine Bureau of Alcoholic Beverages and Lottery Operations to begin the process of ending sales of the nips. The governor made the statements hours after the Maine Senate voted 32-3 to support the bill, and days after the Maine House voted 111-34 to support the 5-cent deposit, both veto-proof margins. The bill faces additional votes.
LePage cited the estimated $1 million cost of incorporating nips into the bottle-deposit law and accused lawmakers of supporting the anti-litter measure without caring “if it cuts funding to other state programs or increases costs for companies that do business here.” The governor said “the severe impact of this bill leaves me no choice” but to ask the beverage bureau to end nips sales.
“This is yet another anti-business vote that threatens jobs, increases costs to do business and puts the state’s financial health at risk,” LePage said.
But Brown, whose Louisiana-based company is the nation’s largest distiller, suggested in his letter to Thibodeau that ending sales of nips – not the 5-cent deposit – posed the biggest threat to the company. As a result, Brown withdrew support for a compromise he negotiated with Sen. Tom Saviello, R-Wilton, to reduce the proposed bottle deposit from 15 cents to 5 cents.
“Under that compromise, we concluded that we could incorporate the 5-cent deposit into our costs without passing it onto the consumer and without negatively impacting any of the 130 jobs in Lewiston,” Brown wrote in the letter obtained by the Portland Press Herald. “Unfortunately, the situation in Augusta has changed and it has caused us to re-evaluate our position.”
Brown said the company “cannot support L.D. 56 or any other legislation that would have such a drastic impact on our company and our employees.”
Nips sales are exploding in Maine, as is the popularity of cinnamon-flavored Fireball, which has the slogan “Tastes like heaven, burns like hell.”
The beverage bureau sold an estimated 8.4 million nips bottles to agency liquor stores last fiscal year and is expected to surpass 12 million bottles this year, according to agency data. Fireball accounted for 42 percent of all nips sales in Maine.
Fireball nips were the fourth most-popular spirits product sold in Maine during fiscal year 2016. Shoppers purchased 2.1 million of the tiny bottles, worth an estimated $2.8 million. Larger, 1.75-milliliter bottles of Allen’s Coffee Brandy, Orloff Vodka and Captain Morgan’s Spiced-Barrel Rum were the three most popular spirits products in Maine that year, according to the beverage bureau.
All told, the nearly 7 million nips bottles sold in Maine generated more than $7.3 million in revenue in fiscal 2016 and represented 5 percent of total liquor sales. Although it was unclear Wednesday how much revenue that product generated for the state, liquor profits have averaged $46 million during the first two years of the bureau’s new liquor contract with Pine State Spirits, which handles warehousing, distribution and marketing of spirits for the state.
Supporters of L.D. 56 describe the bill as a way to reduce roadside litter by using Maine’s successful bottle-deposit bill to encourage recycling. And Sazerac has a vested interest in protecting nips sales and addressing the litter issue in Maine.
Brown, Sazerac’s CEO, declined an interview request from the Portland Press Herald on Wednesday, saying the company was still “evaluating the situation.” But in his letter to Thibodeau, Brown said the company worked with Saviello, who co-chairs the Legislature’s Environment and Natural Resources Committee, on the compromise to reduce the proposed deposit to 5 cents.
“Like you, we are concerned about the apparent littering problem as it pertains to the 50 mils,” Brown wrote in his letter to Thibodeau. “In fact, in the spirit of being a good corporate citizen, we reached a compromise with Senator Tom Saviello.”
But after LePage’s threat to end nips sales, Brown said that “unfortunately we see L.D. 56 as a threat to the goodwill we have come to expect from our relationship” with the state.
Kevin Miller can be contacted at 791-6312 or at:
Twitter: KevinMillerPPH
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