‘You have to grow all parts at the same time’

Fueguia 1833 is a perfume brand that was founded in Buenos Aires and is now sold in stores across Uruguay, Italy, the US, the UK and Japan. Early on, the team realized that vertical integration would be a key part of its business model. In other words, it would try to manage as much of the supply chain and production process as possible in-house. 

‘A manufacturer can tell you anything you want to hear,’ says founder Julian Bedel. ‘You're never going to see the original formula, because it belongs to them. You don't know what's in there, what the quality is or where the origin is, either.’

The DIY approach

Julian began extracting ingredients himself because of difficulties finding the right supply-chain partners, but also because it was an opportunity to market to potential customers. ‘People connect with the brand because of these innovative ingredients,’ he says. 

As with any vertically integrated supply chain, Julian's first step was to source raw materials. He decided he'd try essential oils from top suppliers to start with. ‘I managed to gather their contacts and some samples, and start learning about the scents of these amazing ingredients,’ he says. ‘Getting the support of these suppliers was key.’

For Julian, being vertically integrated goes hand-in-hand with being a sustainable brand. ‘I only produce what I consume, and we can innovate [fast] with our process, the formulas and our suppliers.’ But it also comes with some constraints: ‘You have to handle everything, plan ahead and grow all the parts of your business at the same time.’ He suggests that brands wanting to try vertical integration should start by outsourcing some business activities, and then slowly try to replace them with their own operations as they grow.

For our ‘25 big lessons from small business’ series, we scoured the world to find inspiring people to share the lessons they've learned from running their own companies. Click here to read the other stories.

This special feature was first published in Courier issue 45, February/March 2022. To purchase the issue or become a subscriber, head to our webshop.