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9. SEGMENT REPORTING
 6 Months Ended
Jun. 30, 2015
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, 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, 2015 and 2014.  Sales figures are net of related excise taxes.

 

    Three Months Ended June 30,  
    Direct Sales     Distributor Sales     Total  
    2015     2014     2015     2014     2015     2014  
                                     
Sales, net   $ 1,926,021     $ 1,375,119     $ 2,795,133     $ 2,318,293     $ 4,721,154     $ 3,693,412  
Cost of Sales     608,276       382,562       1,353,225       1,070,086       1,961,501       1,452,648  
Gross Margin     1,317,745       992,557       1,441,908       1,248,207       2,759,653       2,240,764  
Selling Expenses     758,364       578,846       404,825       324,416       1,163,189       903,262  
Contribution Margin   $ 559,381     $ 413,711     $ 1,037,083     $ 923,791     $ 1,596,464     $ 1,337,502  
Percent of Sales     40.8%     37.2%     59.2%     62.8%     100.0%     100.0%
                                                 
    Six Months Ended June 30,  
    Direct Sales     Distributor Sales     Total  
      2015       2014       2015       2014       2015       2014  
                                                 
Sales, net   $ 3,382,585     $ 2,318,770     $ 5,251,070     $ 4,346,521     $ 8,633,655     $ 6,665,291  
Cost of Sales     1,014,417       628,409       2,555,551       2,074,129       3,569,968       2,702,538  
Gross Margin     2,368,168       1,690,361       2,695,519       2,272,392       5,063,687       3,962,753  
Selling Expenses     1,428,605       1,095,139       801,243       623,555       2,229,848       1,718,694  
Contribution Margin   $ 939,563     $ 595,222     $ 1,894,276     $ 1,648,837     $ 2,833,839     $ 2,244,059  
Percent of Sales     39.2%     34.8%     60.8%     65.2%     100.0%     100.0%

 

Direct sales include $391,563 and $197,760 of bulk wine sales in the three months ended June 30, 2015 and 2014, respectively. Direct sales include $639,701 and $197,760 of bulk wine sales in the six months ended June 30, 2015 and 2014, respectively.