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7. SEGMENT REPORTING

9 Months Ended

Sep. 30, 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 and nine month periods ending September 30, 2019 and 2018. Sales figures are net of related excise taxes.

		Three Months Ended September 30,
		Direct Sales								Distributor Sales								Total
		2019				2018				2019				2018				2019				2018
Sales, net		$	2,383,256			$	2,333,721			$	4,375,111			$	3,127,318			$	6,758,367			$	5,461,039
Cost of Sales			703,331				542,154				1,991,014				1,376,714				2,694,345				1,918,868
Gross Margin			1,679,925				1,791,567				2,384,097				1,750,604				4,064,022				3,542,171
Selling Expenses			1,175,802				1,073,089				545,617				554,408				1,721,419				1,627,497
Contribution Margin		$	504,123			$	718,478			$	1,838,480			$	1,196,196			$	2,342,603			$	1,914,674
Percent of Sales			35.3%				42.7%				64.7%				57.3%				100.0%				100.0%

		Nine Months Ended September 30,
		Direct Sales								Distributor Sales								Total
		2019				2018				2019				2018				2019				2018
Sales, net		$	6,458,908			$	6,237,364			$	11,089,082			$	9,577,586			$	17,547,990			$	15,814,950
Cost of Sales			1,735,974				1,580,697				4,969,000				4,079,732				6,704,974				5,660,429
Gross Margin			4,722,934				4,656,667				6,120,082				5,497,854				10,843,016				10,154,521
Selling Expenses			3,406,569				3,089,948				1,676,676				1,550,114				5,083,245				4,640,062
Contribution Margin		$	1,316,365			$	1,566,719			$	4,443,406			$	3,947,740			$	5,759,771			$	5,514,459
Percent of Sales			36.8%				39.4%				63.2%				60.6%				100.0%				100.0%

Direct sales include $418 and $66,420 of bulk wine sales in the three months ended September 30, 2019 and 2018, respectively. Direct sales include $45,981 and $201,390 of bulk wine sales in the nine months ended September 30, 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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