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Liquor distributor unfair, Worcester County says

Worcester County officials say the state’s largest liquor distributor isn’t playing fair and is asking the Office of the Comptroller to investigate.

The claims of price fixing and unfair business practices are part of a two-page complaint filed Aug. 27 by the Worcester County Department of Liquor Control against Reliable Churchill.

Robert L. “Bobby” Cowger Jr., director of the county’s Department of Liquor Control, said the alleged cost-cutting by the distributor is just an attempt to force the county out of the business of distributing liquor. He said Worcester County is relying on Comptroller Peter Franchot, who has made it clear he wants the county out of the liquor distribution business, to investigate and enforce the law.

In a letter sent to the comptroller’s office, an attorney for the county alleged that the distributor offered Captain Morgan Spiced Rum to the county at a price of $12.79 per bottle in April, saying it would be the lowest price offered until October.

That particular product is very popular in Ocean City, so the county purchased 400 cases, Cowger said in an interview.

In July, the distributor offered the same product for $9.99 per bottle through August. The distributor refused even to discuss refunding the difference on more than 2,900 bottles the county had in stock, Cowger said.

“That’s what really upset us,” he said. “Everybody except us got product at $9.99 cost. We can’t sell it to the bars, and our stores are getting killed by the (private) retail stores.”

Based on the price drop, the county says, it overpaid by more than $8,300.

‘Blind deals’

Cowger said Reliable Churchill also violated state regulations by limiting the $9.99 offer locally to the county and to Seacrets, a popular restaurant in Ocean City. Additionally, he and another employee spent the day driving the Route 40 corridor from Delaware to the Baltimore Beltway checking to see if Reliable Churchill offered the $9.99 price to them.

“None of the people knew about it,” Cowger said, adding that he had turned over that documentation of what he called “blind deals” to the comptroller’s office. “We know people will accuse us of sour grapes. We wanted to make sure we have proof and we do.”

Reliable Churchill is a division of New York-based Charmer Sunbelt group, which operates liquor distributors in 13 states and the District of Columbia.

Cowger said the large distributor is playing hardball with the county.

“Reliable is doing everything within their power to put us out of business,” Cowger said.

Andrew Friedson, a spokesman for the Office of the Comptroller, said the agency had received the complaint but declined further comment.

Calls to Kevin Dunn, chief executive officer for Reliable Churchill, were not returned by press time Tuesday.

Change in the system

For nearly eight decades, Worcester County had a monopoly on the distribution of liquor in the county. The three licensed distributors, including Reliable Churchill, were required sell to the county, which in turn sold to local bars and restaurants.

That changed in July, when a new state law took effect that allowed the more than 200 licensees in that county to purchase directly from distributors while at the same time reserving the right to buy direct from the county warehouses.

Franchot has called for an end to government-run alcohol monopolies that exist in a few counties, including Worcester and Montgomery.

“It’s an outdated business model,” Franchot said in July. “I believe it will wither away in the face of the efficiencies of the private sector.”

In that same interview, Franchot vowed to enforce the law evenly. It’s a promise Cowger said he is taking seriously.

“I’m really anxious to see if he’ll go after Reliable,” Cowger said.

Cowger said in July that the county has attempted to remain competitive in the new market. The changes are expected to cut deeply into the amount of revenue the agency contributes to the county budget. This year, the county expects to generate about $8 million in revenue and contribute less than $170,000 to the county coffers — a decrease of 66 percent compared to fiscal 2014, according to county budget documents.

The changes came after a 2010 investigation by the comptroller found the Worcester County agency was illegally purchasing liquor, selling it at below state-mandated prices, selling the same product on the same day to multiple customers at different prices and illegally providing tangible goods, such as juicing machines and coolers, to some customers.