Business Segment Information

3 Months Ended

Mar. 31, 2021

The Company has identified two operating segments, Wholesale net sales and Direct to Consumer net sales, which are reportable segments for financial statement reporting purposes, based upon their different distribution channels, margins and selling strategies. Wholesale net sales include all sales through a third party where prices are given at a wholesale rate, whereas Direct to Consumer net sales include retail sales in tasting rooms, remote sites and on-site events, wine club net sales, direct phone sales, Ecommerce sales, and other sales made directly to the consumer without the use of an intermediary.

The two segments reflect how the Company’s operations are evaluated by senior management and the structure of its internal financial reporting. The Company evaluates performance based on the gross profit of the respective business segments. Selling expenses that can be directly attributable to the segment are allocated accordingly. However, centralized selling expenses and general and administrative expenses are not allocated between operating segments. Therefore, net income information for the respective segments is not available. Based on the nature of the Company’s business, revenue generating assets are utilized across segments. Therefore, discrete financial information related to segment assets and other balance sheet data is not available and that information continues to be aggregated.

The following table outlines the net sales, cost of sales, gross profit (loss), directly attributable selling expenses and operating income (loss) for the Company’s reportable segments for the three months ended March 31, 2021 and 2020, and also includes a reconciliation of consolidated income (loss) from operations. Other/Non-allocable net sales and gross profit include bulk wine and grape sales, event fees and non-wine retail sales. Other/Non-allocable expenses include centralized corporate expenses not specific to an identified reporting segment. Sales figures are net of related excise taxes.



	Three Months Ended March 31,
	Wholesale				Direct to Consumer				Other/Non-Allocable				Total
(in thousands)	2021		2020		2021		2020		2021		2020		2021		2020
Net sales	$	8,190	$	7,929	$	5,967	$	5,562	$	424	$	979	$	14,581	$	14,470
Cost of sales	5,309		5,653		2,351		2,015		1,280		1,354		8,940		9,022
Gross profit (loss)	2,881		2,276		3,616		3,547		(856)		(375)		5,641		5,448
Operating expenses:
Sales and marketing	1,122		1,503		1,324		1,608		599		840		3,045		3,951
General and administrative	—		—		—		—		3,458		3,082		3,458		3,082
Total operating expenses	1,122		1,503		1,324		1,608		4,057		3,922		6,503		7,033
Net loss (gain) on disposal of property and equipment	—		—		—		—		4		(14)		4		(14)
Restructuring costs	—		—		—		—		—		507		—		507

Income (loss) from operations	$	1,759	$	773	$	2,292	$	1,939	$	(4,917)	$	(4,790)	$	(866)	$	(2,078)