SEGMENT REPORTING

6 Months Ended

Jun. 30, 2021

Segment Reporting [Abstract]

SEGMENT REPORTING

6) SEGMENT REPORTING

The Company has identified two operating segments, Direct Sales and Distributor Sales, based upon their different distribution channels, margins and selling strategies. Direct Sales include retail sales in the tasting room and remote sites, wine club sales, internet sales, on-site events, kitchen and catering sales and other sales made directly to the consumer without the use of an intermediary, including sales of bulk wine or grapes. Distributor Sales include all sales through a third party where prices are given at a wholesale rate.

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, including depreciation of segment specific assets, are included, 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. Discrete financial information related to segment assets, other than segment specific depreciation associated with selling, is not available and that information continues to be aggregated.

The following table outlines the sales, cost of sales, gross margin, directly attributable selling expenses, and contribution margin of the segments for the three and six month periods ending June 30, 2021 and 2020. Sales figures are net of related excise taxes.

	Three Months Ended June 30,
	Direct Sales						Distributor Sales						Unallocated				Total
	2021			2020			2021			2020			2021		2020		2021		2020
Sales, net	$	3,149,624		$	2,202,642		$	5,800,327		$	3,366,012		$	-	$	-	$	8,949,951	$	5,568,654
Cost of sales		850,949			489,596			2,959,279			1,577,526			-		-		3,810,228		2,067,122
Gross margin		2,298,675			1,713,046			2,841,048			1,788,486			-		-		5,139,723		3,501,532
Selling expenses		1,591,640			1,166,550			454,244			333,850			189,240		113,598		2,235,124		1,613,998
Contribution margin	$	707,035		$	546,496		$	2,386,804		$	1,454,636
Percent of sales		35.2	%		39.6	%		64.8	%		60.4	%
General and administration														1,367,005		941,960		1,367,005		941,960
Income from operations																	$	1,537,594	$	945,574

	Six Months Ended June 30,
	Direct Sales						Distributor Sales						Unallocated				Total
	2021			2020			2021			2020			2021		2020		2021		2020
Sales, net	$	5,455,807		$	4,154,953		$	9,259,482		$	7,935,596		$	-	$	-	$	14,715,289	$	12,090,549
Cost of sales		1,388,680			967,228			4,693,319			3,709,747			-		-		6,081,999		4,676,975
Gross margin		4,067,127			3,187,725			4,566,163			4,225,849			-		-		8,633,290		7,413,574
Selling expenses		3,082,383			2,297,098			924,725			820,246			344,681		244,694		4,351,789		3,362,038
Contribution margin	$	984,744		$	890,627		$	3,641,438		$	3,405,603
Percent of sales		37.1	%		34.4	%		62.9	%		65.6	%
General and administration														2,567,898		2,023,424		2,567,898		2,023,424
Income from operations																	$	1,713,603	$	2,028,112

Direct sales include no bulk wine sales in the three months ended June 30, 2021 and 2020. Direct sales include zero and $28,734 of bulk wine sales in the six months ended June 30, 2021 and 2020, respectively.