Why, If he is making cigars and some get sold under CAO, some under Gurkha and some under his own brand, he just sells more cigars. From a marketing stand point is makes great sense, I work with that industry quite a bit.
Do you buy private label product at the Grocery store? The quality of them is usually equal to or higher than the national brands, but way cheaper. Why, because the Krafts and P&G's of the world have huge marketing budgets, do massive advertising and have to put all of that into the cost of goods. You often have the same item in the grocery store, almost side by side and your only real choice is how much you with to pay for packaging, advertising and high low sales promotional planning.
These also represent different customers. The person who wants a cheap cigar may not be willing to pay more, so a one brand solution would lose that customer. Likewise the person who is a brand shopper will go for the more prestigious brand and will not buy an equal product, so again you lose the sale.
As for our chat it was really about how CA is all over the place and you can't trust their ratings which I believe are true.