A flight at Ninkasi’s Tasting Room patio in late 2018, including the newer releases Brightberry and Hazy Domination. Photo by Aaron Brussat
Two big announcements hit the presses this week. The first and most local is the news of Ninkasi Brewing’s majority-share sale to Legacy Breweries, Inc., a startup led by former Yakima Chief CEO Don Bryant, in conjunction with the sale of its properties to Kansas City, Missouri based EPR Properties. (The other announcement was the sale of Stone Brewing World Bistro & Gardens – Berlin to Brewdog.) The announcement has caused a lot of speculation and some confusion about what that means for Ninkasi’s future operation. In an email correspondence, Ninkasi co-founder and CEO Nikos Ridge responded to some questions about the sale. Some observations are below the interview.
The strategic partnership (one of those vague business jargon phrases that is irritating for people who might not have an MBA who want to hear a human voice in a business deal) benefits all of the parties involved in different ways. EPR Properties gets money from the lease; Ninkasi gets capital from both EPR and Legacy Breweries, and Legacy Breweries starts its foray with a strong regional brand that has distribution in select markets across the country. Ninkasi sold over half of the beer it produced last year in Oregon, which is remarkable for a brewery of its size. Unlike other brands, both independent and not, Ninkasi doesn’t intend to be an inch deep and a mile wide because of the deal.
Nikos Ridge (left) and Jamie Floyd (right)
What does Ninkasi’s acquisition mean for its employees? Will the purchase allow for improvements, if needed, to job safety or benefits?
Nikos Ridge: Prior to the acquisition we were in the process of executing several things in 2019: we are doing a can line upgrade to a larger filler, and we recently installed a new 5bbl innovation brewhouse as well as are in the process of building out a new restaurant/tasting room concept at the brewery in Eugene. We’ve always had a strong safety and benefits program both of which will see no changes.
What is the advantage of selling and then leasing back the properties from EPR? Was the business at risk if it did not get the infusion of money from the real estate deal?
NR: The investments and partnership goals are primarily directed toward the creation of a new platform that has the financial capability to partner with others breweries in the region.
Since Ninkasi was already contract brewing for Laurelwood, as well as working with smaller local fermentation businesses, what will happen with those arrangements? It sounds like the new business plan will incorporate contract brewing as well, when other breweries are acquired. Can you clarify that?
NR: We will continue on with business as usual from a Ninkasi perspective, including continuing to support our brewing partners.
- Ninkasi co-founder Jamie Floyd looks out from a window in the newly constructed admin building to the new brewing facility in 2014. Photo by Aaron Brussat
The statement on Facebook talks about remaining independent. You were clearly against Hop Valley’s acquisition by MillerCoors, and this is a different arrangement but with the similar outcome of the consumers’ dollars spreading away from their community. The idea of “independence” without owning a majority of the company is confusing. What makes Ninkasi independent now?
NR: I think selling out to someone that has a vested interest in destroying craft beer and spends 10’s of millions of dollars on a national discussion about how shitty or not shitty corn is, is a lot different from a partner who comes in and wants to work with us to build a coalition of craft brewers to leverage the strengths that we’ve built at Ninkasi over the years. More dollars will probably end up in Eugene as a result. I promise you no dollars will end up as ad spending driving sales of terrible beer during the superbowl….
After years of Ninkasi’s growth along with the craft beer market, which has slowed, can you trace some of the key points in the history of the brewery’s growth and distribution to the decision to merge with Legacy Breweries? What, if anything, would you do differently?
NR: We started 13 years ago and grew to a pretty large craft brewery along the way, key points were the beers we’ve made and how much they’ve resonated over the years, building out the facilities and quality programs to support our growth, and having a team that does awesome work every day to make it all happen. This is a huge next step for us in terms of opening up creative partnerships to drive growth in a very dynamic environment right now. Strength through collaboration seems to be a very good strategy to us.
Ninkasi has gotten local criticism for its growth in the Whiteaker neighborhood. How do you respond to people who make those criticisms, and what will the brewery do to maintain goodwill in Eugene?
NR: I don’t spend a lot of time responding to speculative criticism, anyone who knows Jamie and I and Ninkasi know what we do and what we have done here to support Eugene. We both still live here, have families here, have a business here, so we’ll keep doing what we’ve always done.
In the Brewbound article, you said, “I think the ideal partner for us would be someone who is stronger in areas where we are not as developed.” Did you mean geographic areas or areas of production, like beer styles?
NR: Both would be factors in how we would discuss fit with a potential partner.
Should Don Bryant’s plan to buy breweries in the Midwest and eastern U.S. go through, would Ninkasi beer also be produced there for ease of distribution?
NR: Likely depends on the specifics of those situations and whether it is feasible and sensible, so hard to say.
How many employees does Ninkasi have?
Are there any progress updates on the new restaurant/tasting room in the admin building?
NR: Shooting for fall, we have a can line project we are working on early summer and trying not to have too many projects stacked on top of each other.
*end of questions*
- A view from the catwalk on the 550-barrel fermentors to a small packaging line at Ninkasi Brewing in 2017. Photo by Aaron Brussat
Many craft beer drinkers are conscious of buyouts of craft breweries by macro breweries like AB InBev and MillerCoors, and are quick to quantify decisions like Ninkasi’s as “selling out.” In Eugene, many people thought Ninkasi sold out years ago because its beer was distributed by Western Beverage, which is owned by AB InBev. That was far from the truth. Ninkasi ditched Western in 2015, shortly after AB InBev purchased 10 Barrel Brewing. Ridge has been candid about his dislike of the macro breweries’ anticompetitive practices.
Ninkasi began brewing in 2006, and grew at a similar pace to the craft beer industry over that time. It is now the 35th largest craft brewery in the country, according to the Brewers Association, and employs 96 people. Ninkasi did a large expansion in 2014 that increased its maximum potential capacity to 400,000 barrels, though at the time it set its sights at 150,000. In 2018, it brewed around 90,000 barrels.
This acquisition, or buy-in (or even “rebel alliance” as they have referred to it on social media), seems like an appropriately-timed resource shift for Ninkasi, and presents the idea that adaptability is absolutely necessary for a brewery of its size. The announcement also came days before the annual Craft Brewers Convention, which will no doubt spark discussion. Ninkasi went with an option that keeps it off of Wall Street’s scrolling ticker and may allow Ridge and co-founder Jamie Floyd, as board members of Legacy Breweries, Inc., to help steer the larger ship as well. And though Ridge’s responses are terse and jargon-y at times, there is no smoke-and-mirrors about what is happening compared to the repetitive “these aren’t the droids you’re looking for” tactics of the big brewery buyouts.
In fact, brewery consortiums like Canarchy Craft Brewing Collective, a similar business model that includes heavy hitters Oskar Blues and Cigar City, among others, offer a strong and threatening rebuke to the uber-capitalist machinations of macro-owned breweries because of their ability to leverage capital in more diverse ways than a single brewery can. Another example would be Crooked Stave Brewing’s and Stone Brewing’s distribution networks, which offer craft breweries a rare opportunity to be distributed by a business that doesn’t have the influence of macro breweries in its catalog (the way, for instance, Western Beverage, Maletis, and Columbia Distributing do in Oregon; the former two distribute AB InBev, the latter MillerCoors; this fact puts craft beer second to the big money).
“Independent” has become a fluid concept in the beer industry, as the Brewers Association has given ample legroom to Boston Beer Co. (a publicly traded company) to remain a member as it redefines “craft beer,” to which some brewers object. Above, Ridge doesn’t attempt to define independence, but compares his business’ mission to that of the warring macros’ ridiculous Super Bowl duel over whose cheap adjunct ingredient is better. Not a direct answer to the question, but compelling nonetheless.
Ninkasi has done a lot for the Eugene community over the years, from donations to local nonprofits, its wholesale support of the Whiteaker Block Party and other events, and its ability to retain a large number of employees with fair pay and benefits. Many employees are active in other areas of the community, from the music scene to the local homebrew club. Jamie Floyd has been an energetic force in the beer world from Eugene to Capitol Hill, and is on the board of the Oregon Brewers Guild and the Brewers Association’s Technical Committee. Ninkasi also supports local breweries by offering some beer testing services, and the spirit of sharing knowledge abounds as part of its culture. Regardless of all the changes on the financial end, these aspects of the business will remain.