Brewbound Podcast Episode 34: Nikos Ridge on Acquisitions, Debt Management and the Future of Craft

Although Oregon’s Ninkasi Brewing has scaled production to about 100,000 barrels annually over the last 13 years, the company’s growth and expansion strategy has remained rather modest compared to some other U.S. craft breweries.

It never chased a national distribution footprint. It never attempted to build a brewery on the opposite coast. And it never took on too much debt to grow.

“In retrospect, ‘thanks former self’ for being at least somewhat moderate in scope and decision-making,” Ninkasi co-founder Nikos Ridge joked during a recent interview for the Brewbound Podcast.

Ridge — referring to his company’s tactic of selling 85 percent of its beer across three states (it has distribution in 12) and not growing too quickly — said Ninkasi always had a vision of becoming a “super-regional” craft brewery that didn’t need to rely on 20 percent year-over-year growth to service a larger chunk of debt.

“Having gone through the process of negotiating a lot of the debt through our expansion, there were a lot of models that we passed on that would have been heavily impactful,” he said.

“I can’t imagine what it’s like to try to manage 50 states of distribution where you’re thin and not really relevant across a giant territory,” he added.

That’s not to say Ninkasi didn’t tap into bank financing to fund its expanded operations. In fact, the company completed a $24 million expansion in 2014, the last year it grew by double-digits.

In 2015, the company’s growth slowed to 5 percent. Over the next two years, production declined 1 percent and 8 percent, respectively.

Nevertheless, Ridge said Ninkasi’s decision not to expand beyond its means allowed the company to explore a variety of options when it came time to determine its next move.

Ultimately, Ninkasi opted to sell a majority stake to Legacy Breweries, an upstart venture led by former Yakima Chief CEO Don Bryant that aims to acquire U.S. craft breweries.

“Certainly, de-levering as a result of this partnership and putting ourselves in a position to be making investments again – in terms of potential acquisitions and other partnership discussions – is a great result, and part of why we did it, but it wasn’t driven by the need to de-lever.”

In episode 34 of the Brewbound Podcast, Ridge shares his vision for the Legacy Breweries platform and explains some of the transaction options that are available to brewery owners. He also discusses how the proliferation of smaller craft breweries is impacting regional breweries, Ninkasi’s new hard seltzer offering, and how he sees the better-for-you alcohol space developing.

Listen to episode 34 of the Brewbound Podcast above, as well as on iTunes, Google Play, Stitcher, Spotify, and Soundcloud. New episodes of the Brewbound Podcast, which is co-hosted by Chris Furnari and Justin Kendall, are published every Thursday.

Episode 35, which features an interview with Lawson’s Finest Liquids owner Sean Lawson, will be released on Thursday, May 9.

For questions, comments or suggestions, please email podcast@brewbound.com.

Show Notes:

0:00 – 20:48: Furnari and Kendall introduce episode 34 and discuss the latest news

20:48 – 58:30: Furnari interview Nikos Ridge

58:30 – 1:21:31: Furnari and Kendall share their takeaways from the interview and rundown segments

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