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13. SEGMENT REPORTING
 12 Months Ended
Dec. 31, 2014
Segment Reporting [Abstract]  
NOTE 13. 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 twelve month periods ending December 31, 2014 and 2013.  Sales figures are net of related excise taxes.

 

    Twelve Months Ended December 31,  
    Direct Sales     Distributor Sales     Total  
    2014     2013     2014     2013     2014     2013  
                                     
Sales, net   $ 5,197,121     $ 3,768,963     $ 9,959,038     $ 9,502,951     $ 15,156,159     $ 13,271,914  
Cost of Sales     1,307,687       989,262       4,831,866       4,599,177       6,139,553       5,588,439  
Gross Margin     3,889,434       2,779,701       5,127,172       4,903,774       9,016,606       7,683,475  
Selling Expenses     2,435,865       1,757,128       1,283,896       1,321,932       3,719,761       3,079,060  
Contribution Margin   $ 1,453,569     $ 1,022,573     $ 3,843,276     $ 3,581,842     $ 5,296,845     $ 4,604,415  
Percent of Sales     34.3 %     28.4 %     65.7 %     71.6 %     100.0 %     100.0 %