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SEGMENT REPORTING
 6 Months Ended
Jun. 30, 2023
Segment Reporting [Abstract]  
SEGMENT REPORTING

6) 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 (loss) 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 profit, directly attributable selling expenses, and contribution margin of the segments for the three and six month periods ending June 30, 2023 and 2022. Sales figures are net of related excise taxes.

 

   Three Months Ended June 30, 
   Direct Sales   Distributor Sales   Unallocated   Total 
   2023   2022   2023   2022   2023   2022   2023   2022 
Sales, net  $5,517,998   $3,830,195   $5,208,245   $4,870,666   $-   $-   $10,726,243   $8,700,861 
Cost of sales   1,587,834    1,080,634    2,887,831    2,792,970    -    -    4,475,665    3,873,604 
Gross profit   3,930,164    2,749,561    2,320,414    2,077,696    -    -    6,250,578    4,827,257 
Selling expenses   3,563,771    2,308,270    538,762    484,445    247,510    226,898    4,350,043    3,019,613 
Contribution margin  $366,393   $441,291   $1,781,652   $1,593,251                     
Percent of total sales   51.4%   44.0%   48.6%   56.0%                    
General and administration expenses                       1,591,696    1,363,201    1,591,696    1,363,201 
Income from operations                                $308,839   $444,443 
                                         
   Six Months Ended June 30, 
   Direct Sales   Distributor Sales   Unallocated   Total 
   2023   2022   2023   2022   2023   2022   2023   2022 
Sales, net  $9,589,646   $6,787,502   $9,445,537   $8,155,677   $-   $-   $19,035,183   $14,943,179 
Cost of sales   2,877,767    1,828,926    5,428,375    4,566,967    -    -    8,306,142    6,395,893 
Gross profit   6,711,879    4,958,576    4,017,162    3,588,710    -    -    10,729,041    8,547,286 
Selling expenses   6,778,273    4,100,561    1,070,503    962,950    484,847    433,829    8,333,623    5,497,340 
Contribution margin (deficit)  $(66,394)  $858,015   $2,946,659   $2,625,760                     
Percent of total sales   50.4%   45.4%   49.6%   54.6%                    
General and administration expenses                       3,061,529    2,741,735    3,061,529    2,741,735 
Income (loss) from operations                                $(666,111)  $308,211 

 

Direct sales include zero bulk wine sales for the three months ended June 30, 2023 and June 30, 2022. Direct sales include $10,000 bulk wine sales for the six months ended June 30, 2023 and $10,500 bulk wine sales for the six months ended June 30, 2022.