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9. SEGMENT REPORTING
 9 Months Ended
Sep. 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 three and nine month periods ending September 30, 2014 and 2013. Sales figures are net of related excise taxes.

 

                                     
    Three Months Ended September 30,  
    Direct Sales     Distributor Sales     Total  
    2014     2013     2014     2013     2014     2013  
                                     
Sales, net   $ 1,395,164     $ 1,019,176     $ 2,651,037     $ 2,024,370     $ 4,046,201     $ 3,043,546  
Cost of Sales     311,919       267,136       1,234,669       1,017,552       1,546,588       1,284,688  
Gross Margin     1,083,245       752,040       1,416,368       1,006,818       2,499,613       1,758,858  
Selling Expenses     628,320       476,386       306,503       334,848       934,823       811,234  
Contribution Margin   $ 454,925     $ 275,654     $ 1,109,865     $ 671,970     $ 1,564,790     $ 947,624  
Percent of Sales     34.5 %     33.5 %     65.5 %     66.5 %     100.0 %     100.0 %
                                                 
    Nine Months Ended September 30,    
    Direct Sales     Distributor Sales     Total  
      2014       2013       2014       2013       2014       2013  
                                                 
Sales, net   $ 3,713,934     $ 2,751,325     $ 6,997,558     $ 6,943,039     $ 10,711,492     $ 9,694,364  
Cost of Sales     940,328       716,323       3,308,798       3,318,627       4,249,126       4,034,950  
Gross Margin     2,773,606       2,035,002       3,688,760       3,624,412       6,462,366       5,659,414  
Selling Expenses     1,723,459       1,235,450       930,058       982,833       2,653,517       2,218,283  
Contribution Margin   $ 1,050,147     $ 799,552     $ 2,758,702     $ 2,641,579     $ 3,808,849     $ 3,441,131  
Percent of Sales     34.7 %     28.4 %     65.3 %     71.6 %     100.0 %     100.0 %