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SEGMENT REPORTING
 9 Months Ended
Sep. 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 nine month periods ended September 30, 2024 and 2023. Sales figures are net of related excise taxes.

 

   Three Months Ended September 30, 
   Direct Sales   Distributor Sales   Unallocated   Total 
   2024   2023   2024   2023   2024   2023   2024   2023 
Sales, net  $5,020,739   $4,774,942   $4,349,974   $4,573,124   $-   $-   $9,370,713   $9,348,066 
Cost of sales   1,427,377    1,498,980    2,135,222    2,164,508    -    -    3,562,599    3,663,488 
Gross profit   3,593,362    3,275,962    2,214,752    2,408,616    -    -    5,808,114    5,684,578 
Sales and marketing expenses   3,551,780    3,531,564    513,578    586,765    261,493    233,550    4,326,851    4,351,879 
Contribution margin  $41,582   $(255,602)  $1,701,174   $1,821,851                     
Percent of total sales   53.6%   51.1%   46.4%   48.9%                    
General and administration expenses                       1,617,769    1,615,467    1,617,769    1,615,467 
Loss from operations                                $(136,506)  $(282,768)
   Nine Months Ended September 30, 
   Direct Sales   Distributor Sales   Unallocated   Total 
   2024   2023   2024   2023   2024   2023   2024   2023 
Sales, net  $15,028,067   $14,364,588   $13,478,084   $14,018,661   $-   $-   $28,506,151   $28,383,249 
Cost of sales   4,330,945    4,376,747    6,622,680    7,592,883    -    -    10,953,625    11,969,630 
Gross profit   10,697,122    9,987,841    6,855,404    6,425,778    -    -    17,552,526    16,413,619 
Sales and marketing expenses   10,412,084    10,309,836    1,523,369    1,657,268    757,351    718,398    12,692,804    12,685,502 
Contribution margin (deficit)  $285,038   $(321,995)  $5,332,035   $4,768,510                     
Percent of total sales   52.7%   50.6%   47.3%   49.4%                    
General and administration expenses                       5,061,899    4,676,996    5,061,899    4,676,996 
Loss from operations                                $(202,177)  $(948,879)

 

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