Vertical Integration in the Cigar Industry

When a cigar manufacturer says they’re vertically integrated, this means that they control the entire process, from farming the tobacco to producing the final product that you unwrap, light, and enjoy. But this isn’t the typical setup, and often there are a lot of different players that complete the long and involved manufacturing chain.

Personally, I don’t think producing a quality cigar requires that a company be vertically integrated—but I do agree that it provides the manufacturer the opportunity to control consistency and quality, as well as overall cost.

Let’s take a look at all the different players involved in the process of creating a cigar when a company isn’t vertically integrated. On average, there can be as many as four different stops along the way.

#1. The Farmer:

As you would expect, this is the person who plants the seeds and farms the tobacco. Farmers usually sell their tobacco a processor/broker after it leaves the curing barn.

#2: The Processor/Broker:

This is the person who buys tobacco of different varieties and regions and undertakes the fermentation process. After the tobacco has been fermented, it is put in bales to begin the aging process. Sometimes the tobacco is sold on the open market, but other times it’s reserved for a particular manufacturer.

#3: The Manufacturer:

This is the organization that actually takes the tobacco and makes the cigar. This is a process that can consist of blending and making the cigar or creating a cigar using the brand owner’s own recipe.

#4: The Brand Owner:

This is the person or persons who are the “face” of the brand as it’s marketed to consumers and retailers.

Ultimately, I’m more concerned with the quality of the final product than I am with a company being vertically integrated or not. I also think that in many cases, it actually makes more sense for each step to be carried out by someone who specializes in that unique process. For example, some do far better at marketing and selling than they ever would at growing their own tobacco, and there are some world-class growers that wouldn’t know the first thing about marketing and sales. That said, there are some brands that have found it possible to master everything from seed to cigar.

A few of these brands include:

Aganorsa Leaf
AJ Fernandez
Aladino
CLE/Eiroa
Davidoff/AVO/Camacho
Fuente
La Galera
LFD
My Father
Perdomo
Padron