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15. SEGMENT REPORTING
 12 Months Ended
Dec. 31, 2020
Segment Reporting [Abstract]  
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 include retail sales in the tasting room and remote sites, wine club sales, internet 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 twelve-month periods ending December 31, 2020 and 2019. Sales figures are net of related excise taxes.

 

   Twelve Months Ended December 31,
   Direct Sales  Distributor Sales  Total
   2020  2019  2020  2019  2020  2019
Sales, net  $10,533,070   $9,463,481   $16,781,782   $15,285,782   $27,314,852   $24,749,263 
Cost of Sales   2,646,706    2,521,094    7,938,370    6,933,587    10,585,076    9,454,681 
Gross Margin   7,886,364    6,942,387    8,843,412    8,352,195    16,729,776    15,294,582 
Selling Expenses   5,180,431    4,659,543    1,713,370    2,201,091    6,893,801    6,860,634 
Contribution Margin  $2,705,933   $2,282,844   $7,130,042   $6,151,104   $9,835,975   $8,433,948 
Percent of Sales, net   38.6%   38.2%   61.4%   61.8%   100.0%   100.0%

 

Direct sales include $103,958 and $156,768 of bulk wine and grape sales in the years ended December 31, 2020 and 2019, respectively.

 

Net direct-to-consumer sales, including bulk wine, miscellaneous sales, and grape sales, represented approximately 38.6% and 38.2% of total net revenue for 2020 and 2019, respectively.

 

Net sales through distributors represented approximately 61.4% and 61.8% of total net revenue for 2020 and 2019, respectively.