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8. SEGMENT REPORTING
 3 Months Ended
Mar. 31, 2016
Segment Reporting [Abstract]  
NOTE 8. 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 month periods ending March 31, 2016 and 2015.  Sales figures are net of related excise taxes.

 

    Three Months Ended March 31,  
    Direct Sales     Distributor Sales     Total  
    2016     2015     2016     2015     2016     2015  
                                     
Sales, net   $ 1,401,475     $ 1,456,564     $ 2,782,294     $ 2,455,937     $ 4,183,769     $ 3,912,501  
Cost of Sales     327,166       406,141       1,257,555       1,202,326       1,584,721       1,608,467  
Gross Margin     1,074,309       1,050,423       1,524,739       1,253,611       2,599,048       2,304,034  
Selling Expenses     687,628       670,241       376,787       396,418       1,064,415       1,066,659  
Contribution Margin   $ 386,681     $ 380,182     $ 1,147,952     $ 857,193     $ 1,534,633     $ 1,237,375  
Percent of Sales     33.5%       37.2%       66.5%       62.8%       100.0%       100.0%  

 

Direct sales include $2,800 and $248,876 of bulk wine sales in the three months ended March 31, 2016 and 2015, respectively.