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7. SEGMENT REPORTING

3 Months Ended

Mar. 31, 2019

Segment Reporting [Abstract]

NOTE 7. 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, 2019 and 2018. Sales figures are net of related excise taxes.

		Three Months Ended March 31,
		Direct Sales								Distributor Sales								Total
		2019				2018				2019				2018				2019				2018
Sales, net		$	1,720,177			$	1,550,155			$	3,278,609			$	2,982,464			$	4,998,786			$	4,532,619
Cost of Sales			343,439				388,184				1,374,711				1,254,191				1,718,150				1,642,375
Gross Margin			1,376,738				1,161,971				1,903,898				1,728,273				3,280,636				2,890,244
Selling Expenses			1,074,371				986,752				552,668				450,303				1,627,039				1,437,055
Contribution Margin		$	302,367			$	175,219			$	1,351,230			$	1,277,970			$	1,653,597			$	1,453,189
Percent of Sales			34.4	%			34.2	%			65.6	%			65.8	%			100.0	%			100.0	%

Direct sales include $42,763 and $0 of bulk wine sales in the three months ended March 31, 2019 and 2018, respectively.

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- References

No definition available.

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- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-URI http://asc.fasb.org/topic&trid=2134510

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