Serving the royal family is not a duty that is treated lightly and only select companies are entrusted to do so, with these businesses given a royal warrant and a prestigious stamp on their products a sign of excellence.
There are around 800 companies with royal warrants, which have only been handed out by the Queen, the Duke of Edinburgh and the Prince of Wales over the past few decades.
Performance of these stocks has been strong, according to data from eToro. An index of the UK companies with a royal warrant, including fashion house Burberry and brewer Shepherd Neame among others, has returned 16% this year and 98% over three years, compared with a 6% gain and 62% rise for the FTSE 100 over the same periods.
Ben Laidler, global markets strategist at eToro, said: “The strong price performance of this index shows that heritage and luxury sells, regardless of economic ups and downs. The index, which ranges from rifles and watches to shoes and raincoats, has pretty consistently outperformed the FTSE 100, albeit with only one modest year where some gains were lost.”
However, as King Charles III prepares for his coronation on Saturday, some companies may lose their approval in the coming months.
Rob Burgeman, senior investment manager at wealth manager RBC Brewin Dolphin, said: “It is worth noting that those previously held by the Queen do not necessarily automatically transfer over to other members of the royal family – so there may be some changes to the companies which hold a royal warrant in the near future.”
Below, he looks at five publicly listed companies that enjoy the royal warrant.
First up is Diageo, which owns alcohol brands enjoyed by the royal family including Johnnie Walker whisky, Tanqueray gin, Pimm’s, Gordon’s gin, and Lochnagar whisky – which all have been given the royal warrant.
“The company is a stalwart of many funds and well-liked by analysts for its global reach, premium brands, and strong pricing power. Whatever is happening in the global economy, Diageo is well positioned to deliver steady long-term returns to shareholders – and endorsement from the royals only underlines its strengths as a company,” he said.
A fan of the company is LF Lindsell Train UK Equity manager Nick Train, who noted in the fund’s monthly factsheet for March that the company reported record interim results. Its revenues were driven by record sales of its premium and super-premium brands: wealthier consumers are drinking less, but higher quality.
“The results were apparently already in the price because Diageo’s shares closed the quarter down fractionally. Never mind; Diageo can take advantage of the flat price by retiring more shares via its newly announced share buyback. Shrinking its share count at this valuation is exceptionally accretive for long-term investors, we expect,” he said.
Another consumer goods brand on the list is Unilever, which produces everything from Ben & Jerry’s ice cream to Domestos bleach.
Performance of stocks vs FTSE 100 over 10yrs
Source: FE Analytics
Burgeman said: “According to the company, its brands have been supplying goods to members of the royal family since the mid-19th century . Unilever holds seven warrants, including for its iconic Marmite spread, Hellmann’s mayonnaise and Colman’s mustard.
“Although the group has had its recent challenges, it possesses many of the qualities of a great company. Perhaps chief among them is its pricing power, with a broad range of quality brands and exposure to markets across the world.”
Both Unilever and Diageo have comfortable beaten the FTSE 100 over the past decade, as the above chart shows.
The final UK company on the list is Burberry, with the company granted a royal warrant by the Queen as a weather proofer in 1955 and then by the Prince of Wales in 1990 as an outfitter.
“Burberry has had some significant challenges during recent years – particularly with China’s response to Covid-19 and the country being a major market for its products. It is also one of the least favoured FTSE 100 stocks by equity analysts, and has been for some time. If there is a stock to avoid among the companies with the royal seal of approval, it may be this one,” said Burgeman, although shares have rallied strongly this year, as the below chart shows.
Performance of stock vs FTSE 100 over 10yrs
Source: FE Analytics
Turning overseas, European consumer giant Nestlé is another food giant, with a broad range of products including “quintessentially British brands” such as Quality Street, Buxton water, and Shreddies cereal, as well as an international stable including KitKat, Nesquik, and San Pellegrino.
“According to the company, 97% of UK households consume its brands and it sells more than two billion products each year. The spectacular success of its Nespresso brand shows that this is a company which, despite its age and size, is still capable of product innovation,” Burgeman said.
Lastly, South Korea’s Samsung has very few direct links to the UK, but has been one of the main suppliers of electronic products to the royal household since 2012, when it first received its warrant.
“Samsung is a strong company, with a commitment to innovation, global reach and a lot more to its offering than just consumer electronics. The fact that it is an overseas business providing its products to the royal household is testament to its quality,” the RBC Brewin Dolphin analyst concluded.