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SEGMENT REPORTING
 12 Months Ended
Dec. 31, 2021
Segment Reporting [Abstract]  
SEGMENT REPORTING

NOTE 15 – 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 rooms, 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 years ended December 31, 2021 and 2020. Sales figures are net of related excise taxes.

 

   Twelve Months Ended December 31, 
   Direct Sales   Distributor Sales   Unallocated   Total 
   2021   2020   2021   2020   2021   2020   2021   2020 
                                 
Sales, net  $13,272,659   $10,533,070   $18,514,205   $16,781,782   $-   $-   $31,786,864   $27,314,852 
Cost of sales   3,470,963    2,646,706    9,650,228    7,938,370    -    -    13,121,191    10,585,076 
Gross margin   9,801,696    7,886,364    8,863,977    8,843,412    -    -    18,665,673    16,729,776 
Selling expenses   6,929,882    5,170,804    1,914,207    1,677,797    759,634    609,538    9,603,723    7,458,139 
Contribution margin  $2,871,814   $2,715,560   $6,949,770   $7,165,615                     
Percent of sales   41.8%   38.6%   58.2%   61.4%                    
General and administration                       5,371,931    4,269,864    5,371,931    4,269,864 
Income from operations                                $3,690,019   $5,001,773 

 

Direct sales include $103,471 and $103,958 of bulk wine and grape sales in the years ended December 31, 2021 and 2020, respectively.

 

Net direct-to-consumer sales, including bulk wine, miscellaneous sales, and grape sales, represented approximately 41.8% and 38.6% of total net revenue for 2021 and 2020, respectively.

 

Net sales through distributors represented approximately 58.2% and 61.4% of total net revenue for 2021 and 2020, respectively.