SEGMENT REPORTING

9 Months Ended

Sep. 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 nine month periods ending September 30, 2021 and 2020. Sales figures are net of related excise taxes.

	Three Months Ended September 30,
	Direct Sales						Distributor Sales						Unallocated				Total
	2021			2020			2021			2020			2021		2020		2021		2020
Sales, net	$	3,347,446		$	2,648,274		$	4,293,782		$	4,269,857		$	-	$	-	$	7,641,228	$	6,918,131
Cost of sales		883,237			711,172			2,296,353			1,985,762			-		-		3,179,590		2,696,934
Gross margin		2,464,209			1,937,102			1,997,429			2,284,095			-		-		4,461,638		4,221,197
Selling expenses		1,692,392			1,342,550			471,668			360,867			171,563		173,038		2,335,623		1,876,455
Contribution margin	$	771,817		$	594,552		$	1,525,761		$	1,923,228
Percent of sales		43.8	%		38.3	%		56.2	%		61.7	%
General and administration														1,433,142		1,040,908		1,433,142		1,040,908
Income from operations																	$	692,873	$	1,303,834
	Nine Months Ended September 30,
	Direct Sales						Distributor Sales						Unallocated				Total
	2021			2020			2021			2020			2021		2020		2021		2020
Sales, net	$	8,803,254		$	6,803,228		$	13,553,263		$	12,205,452		$	-	$	-	$	22,356,517	$	19,008,680
Cost of sales		2,271,918			1,678,400			6,989,671			5,695,509			-		-		9,261,589		7,373,909
Gross margin		6,531,336			5,124,828			6,563,592			6,509,943			-		-		13,094,928		11,634,771
Selling expenses		4,774,775			3,639,648			1,396,393			1,181,113			516,244		417,732		6,687,412		5,238,493
Contribution margin	$	1,756,561		$	1,485,180		$	5,167,199		$	5,328,830
Percent of sales		39.4	%		35.8	%		60.6	%		64.2	%
General and administration														4,001,040		3,064,332		4,001,040		3,064,332
Income from operations																	$	2,406,476	$	3,331,946

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