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9. SEGMENT REPORTING
 6 Months Ended
Jun. 30, 2014
Segment Reporting [Abstract]  
NOTE 9. 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 includes retail sales in the tasting room and remote sites, Wine Club sales, on-site events, kitchen and catering sales and other sales made directly to the consumer without the use of an intermediary.  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 six month periods ending June 30, 2014 and 2013.  Sales figures are net of related excise taxes.

 

    Three Months Ended June 30,  
    Direct Sales     Distributor Sales     Total  
    2014     2013     2014     2013     2014     2013  
                                     
Sales, net   $ 1,375,119     $ 918,891     $ 2,318,293     $ 2,690,368     $ 3,693,412     $ 3,609,259  
Cost of Sales     382,562       222,318       1,070,086       1,243,047       1,452,648       1,465,365  
Gross Margin     992,557       696,573       1,248,207       1,447,321       2,240,764       2,143,894  
Selling Expenses     578,846       393,546       324,416       342,240       903,262       735,786  
Contribution Margin   $ 413,711     $ 303,027     $ 923,791     $ 1,105,081     $ 1,337,502     $ 1,408,108  
Percent of Sales     37.2%       25.5%       62.8%       74.5%       100.0%       100.0%  
                                                 
    Six Months Ended June 30,  
    Direct Sales     Distributor Sales     Total  
      2014       2013       2014       2013       2014       2013  
                                                 
Sales, net   $ 2,318,770     $ 1,732,149     $ 4,346,521     $ 4,918,669     $ 6,665,291     $ 6,650,818  
Cost of Sales     628,409       449,187       2,074,129       2,301,075       2,702,538       2,750,262  
Gross Margin     1,690,361       1,282,962       2,272,392       2,617,594       3,962,753       3,900,556  
Selling Expenses     1,095,139       759,064       623,555       647,985       1,718,694       1,407,049  
Contribution Margin   $ 595,222     $ 523,898     $ 1,648,837     $ 1,969,609     $ 2,244,059     $ 2,493,507  
Percent of Sales     34.8%       26.0%       65.2%       74.0%       100.0%       100.0%