A Study of the Champagne Industry Shows That Women Have Stronger Networks, and Profit from Them

Female executives are a distinct minority, and they can be particularly rare in certain industries like mining, crude oil production, and agriculture. In such environments, they often face daunting obstacles, but could there also be unexpected advantages to being in a minority group? And, if so, what? To investigate that question, we conducted extensive field research studying grape growers in Champagne, France, a region famous for its sparkling wines. It’s a centuries-old business, in which growers (that is, farmers) sell grapes directly to their buyers (winemakers like Bollinger and Moet & Chandon). In that market, women growers are very much a minority (just 14% of all grape sellers in our sample), and discrimination against them by the majority of male growers is a significant factor. According to one woman in our study, “Among grape growers, you lose a lot of credibility when you’re a woman.” In our study, we focused on this type of seller-side discrimination. One woman described the environment in this way: “Men, especially in farming communities, seem to think that expertise can only come from or be used by men.” Or, as another female grower put it, “Men have always had a monopoly…. They have their technical conversations; there were no women involved.” Past research investigating a variety of markets has focused instead on buyer-side discrimination; it notably shows that minority sellers often receive lower prices for the same good. For example, minorities (women, non-whites and older people) are paid less than their majority counterparts when selling cards in baseball card shows, and African Americans are offered lower prices than whites for the same products on eBay. For our study, we wanted to minimize any buyer-side factors in order to isolate and study mechanisms on the seller side. In that respect, the Champagne grape market provided a good environment because of two characteristics. First, grape quality there is recorded by an official scale that was established in the early 1900s and is observable by all market participants. Second, the market is relatively price inelastic because of a limited supply coupled with a booming demand. Together, the two characteristics – quality transparency and price inelasticity – would tend to make it difficult for buyers to discriminate on price against minority growers. To uncover any gender-based differences in prices, we conducted a detailed quantitative analysis of more than 5,700 individual sales transactions over a 17-year period. The results were surprising. We found that female growers were able to charge systematically higher prices than male growers for grapes of the same quality. The difference might seem small (a premium of just 1% to 2%), but for an average grape seller that would translate to more than 2,500 euros annually. Moreover, most Champagne growers are relatively small operations employing an average of about three employees. Thus an additional 2,500 euros is not trivial. To investigate the reasons for the difference, we interviewed 67 people: 37 grape growers (22 men and 15 women), 14 CEOs of Champagne houses, and 16 industry experts. From that qualitative research, we found that an underlying reason for the price difference was the relationships developed and maintained by the women growers. Often, minorities who are excluded from the majority will seek solidarity with one another, and this was certainly the case for the female growers, who tended to interact for social support. These informal relationships frequently led to the women exchanging useful knowledge and market information that the men tended to keep secret. Those conversations might include information about who does business with whom, to what extent, for what grapes, and at what price. We should emphasize that we did not observe any price collusion – that is, instances of the women explicitly coordinating their pricing with one another. Instead, their informal relationships helped facilitate the benevolent and legitimate exchange of different types of information, which might include professional advice and information about the prices they were charging buyers. Moreover, because the women tended to socialize more with each other, their trust in the accuracy of the information obtained through those interactions was relatively high. In contrast, men tended to be more skeptical of what they heard from other male growers, assuming, for example, that competitors were prone to boastfully exaggerate a price that was paid for a certain crop. And that’s only in the rare instances when men would even talk about prices. As one male grower in our study noted, “Price is not something people talk about in Champagne. It’s a private matter. For some reason, it makes people feel uncomfortable.” Consequently, because the female growers were able to obtain more accurate market information, they were able to price their own products more aggressively than the male growers. Combined with past studies, our research has implications for female leaders and minorities in other industries. When an organization contains just a few “token” minorities, those individuals will tend to compete with one other to distinguish themselves. But when a minority group is somewhat larger, people in that group will be more likely to identify with one another and develop supportive relationships. And, as the female grape growers in Champagne have shown, a network of such relationships can result in tangible benefits, including not just social support but also the sharing of valuable business information such as the prices being charged in a market. From a broader context, our work highlights an unexpected consequence of discrimination. Specifically, when minority members are slighted by the majority, they might tend to turn to one another for social support, resulting in a network of informal relations that may (ironically) enable them to achieve better outcomes. For example, observers have noted that women are slowly making inroads in male-dominated markets such as technology entrepreneurship and private equity. But some evidence suggests that, as a group, their contributions are undervalued in these settings. As such, it’s possible that the dynamics we document in the Champagne grape market might also be at play in these industries. Note that such dynamics are especially likely when there’s a certain amount of “information friction” in the market, such as incomplete or asymmetric information between exchange partners, and when deviations from established norms of behavior remain relatively discreet. Interestingly, the male growers in our study were largely unaware that they might be at a price disadvantage. According to one man in our study, “I don’t see any reason why men and women would obtain systematically different prices. I really don’t.” Or, as another man noted, “I would be very surprised to find out women are getting higher prices.” As such, it appears that the male grape growers in Champagne, France have much to learn from their female counterparts about the importance of social networks to increase the competitiveness of their businesses.

A Study of the Champagne Industry Shows That Women Have Stronger Networks, and Profit from Them

Summary.

Partner Center