'BY Appointment to Her Majesty the Queen."The words and the accompanying royal seal constitute the Royal Warrant, which can be seen on everything from a package of tea to the exterior of high-priced shops in London. The Royal Warrant is about selling using the old-fashioned appeal of snobbery and exclusivity. And British merchants hope it gives them an edge. "I'm not sure if snob is the right word, but I can understand why people might use it," says Gerald Hamilton, managing director of Fortnum and Mason. "It sets you in the top part of the market." Fortnum and Mason supplies groceries to the Queen and leather goods to the Queen Mother. Over the door of the store on Picadilly is a huge royal coat of arms, boasting of the status of being a place where the "royals" shop. Royal Warrants are awarded to tradesmen who serve the royal household. This is an ancient practice that means little at home but is helpful in selling abroad - to Americans, Europeans, and especially the Japanese. "British people are very price-conscious, they all want to shop at Marks and Spencers [a low-cost British department store], rather than at a Royal Warrant holders where they might pay a bit more for the same product," says Commander Hugh Faulkner of the Royal Warrant Holders Association. Four members of the royal family can grant Royal Warrants: the Queen, the Queen Mother, the Duke of Edinburgh, and the Prince of Wales. In the past other family members, such as a Princess of Wales in the 19th century, were allowed to grant warrants. Harrods, a large London department store, is one of only 11 firms which has all four Royal Warrants. Other firms include Rolls Royce and the Rover Group, makers of Land Rovers and Range Rovers, driven by all members of the Royal family. Warrants come in some unexpected areas. John Weatherston of Glasgow holds the warrant as maker of the Queen's bagpipes. Valerie Bennet-Levy, one of only 40 women warrant-holders out of a total of 890, makes flower bouquets for the Queen. Mayfair Window Cleaning Company washes windows for the Queen Mother. There is little doubt among those who hold the warrant that it is a valuable marketing tool. "When Americans want something English, as a present say, and they see it's got a Royal Warrant, it's a valuable selling point," says Sheila Pickles, managing director of Penhaligon's Ltd., a perfume and toiletry maker with warrants to supply both Prince Philip and Prince Charles. Miss Pickles says the whole thing is especially English. "I suppose we're a race of snobs," she says half-jokingly. But she is a clever businesswoman who has taken Penhaligon's from near bankruptcy to success over the past 15 years. Two Royal Warrants helped her do the job. Royal Warrants have been around since the 12th century, but they really took off as a business tool in the 19th century when Queen Victoria and her pro-industry husband, Prince Albert, granted hundreds of warrants. Getting a Royal Warrant is not easy. A company must supply services to the royal family for at least three years. Keeping one is usually easier, though some do drop off the list. George Trumper, a barber shop near Buckingham Palace, used to cut the royal hair, and be able to boast of it in its window. No more. And Commander Faulkner, a retired Royal Navy officer, has spent 11 years keeping a careful eye on those who break the rules. He gives the example of a Welsh taxi driver who, after taking a few fares to Buckingham Palace, decided to give himself a Royal Warrant and put it on his business cards. Not done. "He was fined British pounds500," reports Commander Faulkner. Some loyal Englishmen are dismayed that many warrant-holders are not British. Rupert Murdoch - an Australian turned American - owns Hatchard's bookshop, which has four Royal Warrants; Penhaligon's is owned by The Limited of Columbus, Ohio; Fortnum and Mason's is owned by the Canadian Weston family; and even venerable Harrods was bought six years ago by the Egyptian Fayed brothers. There could be changes in the ancient world of Royal Warrants. Some warrant-holders worry that when Charles, the environmental Prince, becomes king, there could be new "green" criteria to win the status symbol. The royal grocer may have to worry more about dolphin-safe tuna than carrying only the best in caviar.