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SEGMENT REPORTING
 6 Months Ended
Jun. 30, 2024
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 ended June 30, 2024 and 2023. Sales figures are net of related excise taxes.

 

                                                               
   Three Months Ended June 30, 
   Direct Sales   Distributor Sales   Unallocated   Total 
   2024   2023   2024   2023   2024   2023   2024   2023 
Sales, net  $5,721,172   $5,517,998   $4,611,186   $5,208,245   $-   $-   $10,332,358   $10,726,243 
Cost of sales   1,608,422    1,587,834    2,252,246    2,887,831    -    -    3,860,668    4,475,665 
Gross profit   4,112,750    3,930,164    2,358,940    2,320,414    -    -    6,471,690    6,250,578 
Selling expenses   3,596,924    3,563,771    505,367    538,762    235,880    247,510    4,338,171    4,350,043 
Contribution margin  $515,826   $366,393   $1,853,573   $1,781,652                     
Percent of total sales   55.4%   51.4%   44.6%   48.6%                    
General and administration expenses                       1,596,613    1,591,696    1,596,613    1,591,696 
Income from operations                                $536,906   $308,839 
   Six Months Ended June 30, 
   Direct Sales   Distributor Sales   Unallocated   Total 
   2024   2023   2024   2023   2024   2023   2024   2023 
Sales, net  $10,007,328   $9,589,646   $9,128,110   $9,445,537   $-   $-   $19,135,438   $19,035,183 
Cost of sales   2,903,567    2,877,767    4,487,459    5,428,375    -    -    7,391,026    8,306,142 
Gross profit   7,103,761    6,711,879    4,640,651    4,017,162    -    -    11,744,412    10,729,041 
Selling expenses   6,860,305    6,778,273    1,009,792    1,070,503    495,856    484,847    8,365,953    8,333,623 
Contribution margin (deficit)  $243,456   $(66,394)  $3,630,859   $2,946,659                     
Percent of total sales   52.3%   50.4%   47.7%   49.6%                    
General and administration expenses                       3,444,130    3,061,529    3,444,130    3,061,529 
Loss from operations                                $(65,671)  $(666,111)

  

There were no bulk wine sales for the three months ended June 30, 2024 and June 30, 2023. There were no bulk wine sales for the six months ended June 30, 2024 and $10,000 of bulk wine sales included in direct sales for the six months ended June 30, 2023.