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8. SEGMENT REPORTING
 6 Months Ended
Jun. 30, 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 and six month periods ending June 30, 2016 and 2015. Sales figures are net of related excise taxes.

 

    Three Months Ended June 30,  
    Direct Sales     Distributor Sales     Total  
    2016     2015     2016     2015     2016     2015  
                                     
Sales, net   $ 1,565,355     $ 1,926,021     $ 3,073,673     $ 2,795,133     $ 4,639,028     $ 4,721,154  
Cost of Sales     368,546       608,276       1,346,181       1,353,225       1,714,727       1,961,501  
Gross Margin     1,196,809       1,317,745       1,727,492       1,441,908       2,924,301       2,759,653  
Selling Expenses     835,714       758,364       451,558       404,825       1,287,272       1,163,189  
Contribution Margin   $ 361,095     $ 559,381     $ 1,275,934     $ 1,037,083     $ 1,637,029     $ 1,596,464  
Percent of Sales     33.7 %     40.8 %     66.3 %     59.2 %     100.0 %     100.0 %
                                                 

 

    Six Months Ended June 30,  
    Direct Sales     Distributor Sales     Total  
    2016     2015     2016     2015     2016     2015  
                                     
Sales, net   $ 2,966,830     $ 3,382,585     $ 5,855,967     $ 5,251,070     $ 8,822,797     $ 8,633,655  
Cost of Sales     695,712       1,014,417       2,603,736       2,555,551       3,299,448       3,569,968  
Gross Margin     2,271,118       2,368,168       3,252,231       2,695,519       5,523,349       5,063,687  
Selling Expenses     1,523,342       1,428,605       828,345       801,243       2,351,687       2,229,848  
Contribution Margin   $ 747,776     $ 939,563     $ 2,423,886     $ 1,894,276     $ 3,171,662     $ 2,833,839  
Percent of Sales     33.6 %     39.2 %     66.4 %     60.8 %     100.0 %     100.0 %

 

Direct sales include $0 and $390,825 of bulk wine sales in the three months ended June 30, 2016 and 2015, respectively. Direct sales include $0 and $639,701 of bulk wine sales in the six months ended June 30, 2016 and 2015, respectively.