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Beginners Cigar Guide - What Determines the Price of Cigars

16th Nov 2020

Hi, and welcome to another episode of Monday with Mardo's. This is Gerard, and today we are going to talk about the breakdown of cigar prices. But before we get going, I need you to click on that subscribe button, click on the bell to be notified every week of new episodes with Mondays with Mardo.

Although there are various reasons of what drives the cost of a cigar today, I'm just going to break it down to three parts. We're going to talk about the cost of tobacco. We're going to talk about the cost of packaging, and then we're also going to talk about the cost of operation of a cigar company. All right. Now, we're going to talk about the price of tobacco, and I'm going to break it down to two fundamental aspects.

Number 1

Number one, we're going to talk about the demand of certain tobacco and then, two, we're going to talk about the aging of tobacco. When it comes to the demand of tobacco, as of recent, Connecticut Broadleaf has been in very high demand. The bigger companies that can afford a lot of tobacco will buy out all the Connecticut Broadleaf because of the market's demand. When a smaller company tries to buy some Connecticut Broadleaf, they're not going to get the best quality so, therefore, they're going to hold off their operation and production on Connecticut Broadleaf cigars. What they're going to do is wait until they can get their hands on some good quality. However, they're probably going to pay a pretty high premium for it so, therefore, it's going to drive up the cost of that certain cigar.

Second aspect of it is the aging of tobacco. Whenever you age tobacco, you're going to take up shelf space. It could be three months, up to four years, up to 10 years, depending on the company's preference of how long they want to age the tobacco. Whenever a company sources out aged tobacco, depending how long that tobacco has been sitting on the shelf, because the turnover is not going to be very high on that shelf space, that tobacco price is going to be very, very high. Now, there are many other aspects but I just want to break it down to two, of the demand of it and also the vintage type of tobacco that does demand aging.

Number 2

All right. Part two, we're going to talk about the price of packaging. Cigars usually come in cellophane. However, some cigars do come in glass tubes, aluminum tube. They even come in their own wooden coffin boxes, and this can drive up the cost of the cigar. The exterior box could be cardboard, could be a wooden box, or it could be something even more elaborate like a humidor style like box that it gets delivered in. The artwork, the more elaborate the artwork, the more you have to pay for a graphic artist or an artist so, therefore, this packaging is going to get more expensive. If you see a cigar with very, very fancy packaging, do consider that the price of the cigar, if it is high, it is passed onto the consumer, unfortunately. Not all cigars that are good do have to come in elaborate beautiful packaging. Just get yourself a little bit educated and pick a cigar that you know is very good and you're not really sold on the packaging.

Number 3

All right. Part three, we're going to talk about the cost of operation. Anybody with a good business plan can approach a cigar manufacturer and have a private label made for them. They're going to roll the cigar, they're going to package it and they're going to ship it and you can call it brand X and distribute it yourself. Now this cigar could cost a lot more compared to somebody that has their own manufacturing and their own distribution. You can even go further in the process and have your own farm, your own manufacturing, and also your own distribution and you can pass on the savings to the consumer.

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This concludes the video of this week. Thank you for watching Mondays with Mardo. Let me know in the comments what you think of this video. But before I get going, I need you to follow us on Instagram, like us on Facebook and remember to shop through our YouTube channel. I'll see you guys next week.