So why obsess over the Fever-Tree logo? It's 'the Katy Perry effect'. Not that the American singer is a known Pimm's aficionado. Rather, she is known for her popularity. With a world-leading 86.8m Twitter followers, Ms Perry is living proof that popularity begets popularity. It's what behavioural economists call 'preferential attachment' - the idea that people go where others go. On Twitter they follow Katy Perry (or Justin Bieber or Taylor Swift) not for the penetrating wisdom of their comments but because everybody else does.
As a species, that's what we do. We follow. We cluster. We crowd. We buy Mary Berry cookbooks. We read The Girl on a Train. We download Adele albums. Not necessarily because they're wonderful - though they may be - but because everyone else does.
What works for cookbooks and pop tunes also works for ginger ale and for company shares. For much the same reason that Mrs Bearbull insists on Fever-Tree ginger ale, investors insist on buying shares in mixers maker Fevertree Drinks (FEVR). Should you doubt that, consider that Fevertree's share price – at 625p – has risen 4.5 times since the shares were floated in November 2014 and currently they are rated on 42 times City forecasts for 2016's earnings. Popularity, or what?
Naturally, the sellside City analysts who market Fevertree shares and the investors who have bought them can find plausible reasons both to justify the rating and explain why the price can go higher. And there is no question that the company has been a wonderful success since it was founded by Charles Roll, a serial entrepreneur, and his side kick, Tim Warrillow, in 2005. For example, in the four years to 2015 sales rose fivefold to £59m and pre-tax profits grew slightly faster to £16.8m. In the process, the group carved out jumbo-sized profit margins - 29 per cent in 2015 - and made a return on equity almost as good: 22.5 per cent.
Nor do analysts expect progress to falter in the near term. In 2018, revenue will be almost double 2015's level, they reckon, and earnings per share will be two-thirds higher at almost 19p.
It's even possible to justify that PE ratio, but only if (a) you make heroic assumptions about the company's long-term growth, (b) you assume Fevertree will continue to produce a return on equity that fizzes and (c) that investors are now willing to accept only moderate returns from holding the shares.
Meanwhile, there are readily available factors that undermine the rating. Chief of these is the notion that Fevertree only thrives courtesy of Coca-Cola (NYSE:KO). That's a way of saying that, in the global market for carbonated soft drinks, Fevertree is just a sapling. It's all very well for its marketing to say that "the group is the world’s leading supplier of premium carbonated mixers". That statement seems to owe much to the creation of a very special marketing slot. It also forgets that Schhh . . . you know who created a premium mixer brand with brilliant marketing over 40 years ago and that Fevertree's success owes much to the disarray that Schweppes has found itself in since the break-up of Cadbury Schweppes in 2008.
That corporate dismantling means the Schweppes brand is now shared among 10 owners, one of which is the mighty Coca-Cola. Were Coke's bosses to decide that the mixers market would be a good niche to attack, they could crucify Fevertree. After all, Fevertree does nothing that its competitors can't; it has little pricing power and - if Coke got nasty - could find itself shoved off the supermarket shelves. To that extent, the 'first mover' advantage in the market for premium mixers that Fevertree's bosses claim is probably illusory.
Happily, a rational rival should conclude that it makes more sense to buy a good brand than to destroy it. So ultimately Fevertree's shareholders may be saved by a takeover. And, besides, until these scenarios play out Fevertree's sales are likely to keep moving merrily upwards.
Even so, Fevertree shareholders should be under no illusion - their stellar investment returns owe much to the Katy Perry effect. And that will fade. Look what's happened to shares in a recent champion of marketing pizzazz, Burberry (BRBY). Five years ago - when consumers could not get enough of those distinctive checks - the rating was 50 times earnings. After this week's profits warning, it is more like 16 times.
Maybe those same shareholders should follow the lead of Fevertree's bosses - Messrs Roll and Warrillow - who dumped almost £18m-worth of stock last month. Or, at least, put it this way - that rating just won't get any better. Forget the Pimm's - that calls for a stiff gin and tonic.
