Bale Breaker acquires Cloudburst Brewing: Exclusive Interview w/ the founders
Yakima, Washington’s Bale Breaker Brewing has acquired Seattle, Washington’s Cloudburst Brewing
Steve Luke is moving to Mangawhai Heads, a small township on the northern part of the Mangawhai Harbour in New Zealand’s Northland region. Luke founded Cloudburst Brewing in Seattle’s Belltown neighborhood in 2016 after leaving Elysian Brewing. Luke’s wife, Holly, a now former federal public service employee, took a job opportunity in New Zealand that neither could refuse and they have decided to see what the clouds are like in the southern hemisphere.
“Bale Breaker has acquired us 100%,” confirms Steve Luke from the Sip Magazine offices patio over Lake Union. “It is a feel good acquisition, there are no other good words to describe this kind of partnership positively.”
Technically, Cloudbreaker LLC has acquired Cloudburst Brewing and that is a wholly Bale Breaker owned entity.
“They [Bale Breaker] knew Holly [Steve’s wife] and I were moving to New Zealand first, and I was like ‘do you guys want to run Cloudburst? And they were like NO,’” says Luke with a laugh.
“The true story is that when he asked if we wanted to take over and run Cloudburst, it was like ‘uhhhh no. But I can be a sounding board about how you might want to sell it.’” clarifies Bale Breaker co-owner Kevin Quinn, as he sits with Meghan Quinn, and brewmaster Kevin Smith, discussing the upcoming acquisition with New School Beer and Sip Magazine.
Bale Breaker Brewing’s Meghann Quinn, Kevin Quinn, and Kevin Smith
Combined, Cloudburst Brewing and Bale Breaker Brewing have been the almost undisputed industry leaders of Washington hoppy beers. Bale Breaker being owned by the family behind Loftus Ranches hop farm with straight from the field access to hop varieties like Simcoe®, Citra®, and Mosaic® and countless other new and developing cultivars. And Cloudburst, a hop obsessed brewery that rarely makes the same pale ale twice and one of the pioneers of the not quite hazy and not quite clear contemporary American IPA category.
The partnership / slash acquisition makes a lot of sense for a number of reasons, not just their combined hop acumen. Bale Breaker Brewing is one of Washington’s largest craft brewers, producing around 22,000 barrels of beer a year from their Yakima based production facility and a much smaller amount from their shared Seattle taproom/brewery with Yonder Cider. Bale Breaker’s chief output is in 12oz cans widely available in grocery stores in Washington, Oregon and Idaho, and with an emphasis on core, dependable, year-round flavors. Cloudburst on the other hand is small, making only about 2,000 barrels a year and self-distributing it in primarily just Seattle with a very limited amount of 16oz cans and draft with almost no overlap in beers and at a rate that almost no brewery in Washington can compete with.
“Internally we were talking about it and it and thinking about how Cloudburst is so important to craft beer, and Washington beer. The biggest thing that gave us heartburn about taking it on was the state of the industry right now,” says Kevin Quinn. “But the more we thought about it, we thought we would be the best people to do this…and then when we saw the books we were like ‘wow.’”
“There were other people who knew I was moving [to New Zealand] and were interested in acquiring Cloudburst, and when Bale Breaker came back around and asked if it was too late, I was like ‘almost,’” says Luke.
According to Luke, Cloudburst has been profitable since the beginning partly because of their zero growth policy and a DIY approach to doing everything in-house. That has meant Steve Luke taking on all sorts of roles that would usually be done by an employee, like balancing the books, art direction, writing all the beer recipes, and even running the social media.
The commitment to staying small has ironically taken a toll on Steve Luke personally. By selling ownership to Bale Breaker the Cloudburst brand will remain small and relatively independent, but grow production by outsourcing the sole flagship beer “Happy Little Clouds” Pilsner [multiple time GABF and World Beer Cup award winner] to Bale Breaker’s larger brewery, leaving Cloudburst Brewing’s brewery to continue to focus on constantly rotating small batch beers.
“Getting my creative energy back is a big priority,” says Luke. “I feel like it has waned over the last couple years. If anything now I will get more creative with names and recipes.”
“The final thing that got us to commit to it is agreeing to keep everyone at Cloudburst still on, including Steve,” says Bale Breaker brewmaster Kevin Smith. “That’s the hard thing about acquiring the brand, Steve Luke is Cloudburst and Cloudburst is Steve Luke, if you take away that person it’s like what do you have? So we were like ‘if we take away all the things you dont like will you stay on and do the fun shit?’”
Cloudburst Brewing will remain the same according to both parties. Steve Luke, from a beach in New Zealand, will still write all the beer recipes and oversee the fun stuff like their popular and occassionally unhinged and controversial instagram account. All the employees and both Cloudburst locations will be retained, even self-distribution will remain under longtime manager Noah Schellhammer who will be the hands on GM.
“We put no shackles on Steve,” adds Meghann Quinn. “This is the best case scenario because it's friends helping friends out. For Cloudburst you are aware of who we are and who is behind it the entire time.”
“Going with a family [Bale Breaker and the Quinns] that know Cloudburst through and through and will take us even with our instagram being as crazy as it is, was huge in making the decision on who we might sell to,” says Luke. “Holly and I can't run a small Seattle brewery from New Zealand.”
Cloudburst will continue brewing all of their beers in-house except Happy Little Clouds, and Bale Breaker has no intention of changing the recipes, hop varieties, or brewing processes.
“The way Cloudburst is set up is they brew new recipes every single brew time unless Steve is feeling lazy,” says Bale Breaker’s Kevin Smith with a laugh and a lighthearted jab to Steve. “If we move everything over to Yakima that's going to change the flavors and that’s not what we want. Bale Breaker uses 95-98% of the hops that we grow but we dont have any desire to change what Cloudburst uses.”
The more things change, the more things stay the same. The major benefit to Cloudburst consumers is no foreseeable price increases which with the cost of ingredients constantly ratcheting up was coming in the near future.
“The economies of scale will be much better for Cloudburst. They [Bale Breaker] get to play with the same ingredients, the same hops, but currently I pay atleast $3 more per pound more than they do,” says Luke. “Our margins have been down the last 3 years just because we are absorbing all these costs. At some point the consumer is going to say this is just too much. So we just take hits and take hits and take hits. We were at a pretty close point of raising prices and how often can you do this before people say ‘no’.”
The benefits include contracts and storage of cans by Bale Breaker, bookkeeping, human resources, even a real brewing lab for quality control and better sensory evaluations that Luke has been craving for improving their beers and systems.
“It’s not cost cutting, it’s cost saving,” adds Meghan Quinn. “I hope that a month from now it's old news and people dont even notice the difference.”
“I have been tired for so long, something had to give and it has been my physical and mental health beyond everything else. And that is what it's like when you are a perfectionist that has trust issues. I would love to hand off this stuff to other people that I truly fucking trust. And there are only so many places where that can happen. It's like handing off my baby, and you want to keep it in the family. Cloudburst can actually be run better without me doing all the things I felt like I had to do,” says Luke.
Mangawhai Heads, New Zealand
But what is Steve Luke going to do now besides zooming in to the brewery from a beach and dreaming up new Kiwi themed memes for instagram?
Well, he will still come back to Seattle 3-4 times a year and is fully committed to ensuring Cloudburst is still Cloudburst and the beer tastes the same. But after taking a year or two off from full-time running a brewery, Luke fully intends to open a new brewery in New Zealand.
“I told my wife that they would find me dead of old age on a brewdeck and I intend to keep that promise.” - Steve Luke