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SEGMENT REPORTING
 12 Months Ended
Dec. 31, 2023
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 (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 margin, directly attributable selling expenses, and contribution margin of the segments for the years ended December 31, 2023 and 2022. Sales figures are net of related excise taxes.

 

   Twelve Months Ended December 31, 
   Direct Sales   Distributor Sales   Unallocated   Total 
   2023   2022   2023   2022   2023   2022   2023   2022 
Sales, net  $20,518,872   $15,732,142   $18,617,242   $18,201,939   $-   $-   $39,136,114   $33,934,081 
Cost of sales   6,159,109    4,710,457    10,419,877    10,409,528    -    -    16,578,986    15,119,985 
Gross margin   14,359,763    11,021,685    8,197,365    7,792,411    -    -    22,557,128    18,814,096 
Selling expenses   14,327,967    10,690,806    2,145,576    2,020,713    1,090,560    928,771    17,564,103    13,640,290 
Contribution margin  $31,796   $330,879   $6,051,789   $5,771,698                     
Percent of sales   52.4%   46.4%   47.6%   53.6%                    
General and administrative expenses                       6,200,227    5,720,224    6,200,227    5,720,224 
Loss from operations                                $(1,207,202)  $(546,418)

 

Direct sales include $69,924 and $97,652 of bulk wine and grape sales in the years ended December 31, 2023 and 2022, respectively.

 

Net direct-to-consumer sales, including bulk wine, miscellaneous sales, and grape sales, represented approximately 52.4% and 46.4% of total net sales for 2023 and 2022, respectively.

 

Net sales through distributors represented approximately 47.6% and 53.6% of total net sales for 2023 and 2022, respectively.