Wallace Berrie & Co. has learned that, with slight modifications, ordinary objects can bring higher than ordinary prices.
The Woodland Hills company is a leader in the giftware business. It licenses, manufactures and sells stuffed animals, dolls, drinking mugs, picture frames, wall hangings and other novelty items.
"A plain white mug belongs in a diner," said Tony de Masi, editor of Giftware News, a Des Plaines, Ill., trade magazine. "Put a smiley face on it and it becomes a gift."
Wallace Berrie, indeed, makes a happy-face mug. But its product line has as many phrases and one-liners as a greeting card rack in a stationery store--which just happens to be where many of Wallace Berrie's products are sold.
The Brash and the Sweet
The company's products include the garishly brash and the saccharin sweet. Mugs retail for about $5 after they are painted with phrases in neon colors. One mug, captioned "Turned On," shows a bathtub faucet with a big red droplet hanging from it. Another mug says "Too Cool" under a pair of mirror sunglasses.
The company's hottest sellers are dolls licensed from Jonathan & David, a Michigan company run by a pair of ministers. "Precious Moments" bears, giraffes and little girl dolls with teary eyes come with messages in heart-shaped lockets like "Smile, God loves you" and "God is watching over you."
With the addition of such messages, the company has found, adults suddenly become the customers for stuffed animals.
The privately held company's most profitable venture, however, is licensing out characters to other companies. Because the only expense in licensing is paper work, 20% of profits come from the enterprise, although licensing accounts for only 5% of its $100 million a year in sales, according to President Larry Elins.
Wallace Berrie is the exclusive North American licenser for Smurfs, troll-like creatures with baggy hats, blue complexions and names like Nat, Snappy and Slouchy. The company also licenses Snorks, bug-eyed little guys with elephantine trunks protruding from the tops of their heads.
Smurfs and Snorks have their own Saturday-morning television shows on NBC--clever advertising for Smurfs scented pencils, glitter glue and pink plastic heart bracelets and for Snorks purple sun visors, whistle key chains and flicker buttons.
Although Wallace Berrie makes Smurf dolls itself, the other products are all made by other companies, which pay royalties to Wallace Berrie. The toys, meanwhile, promote the show for NBC and Hanna-Barbera, creator of the animated cartoons.
Wallace Berrie is also a licensee. It makes doll versions of Disney characters such as Mickey Mouse and Donald Duck, as well as Sesame Street's Bert, Ernie, Grover and others. Sometimes the dolls come with elaborate costumes--Mickey wearing a tuxedo and top hat, for instance, and Minnie in a formal pink dress. Hasbro of Pawtucket, R.I., has the licenses to produce the characters as toys, such as puppets, as opposed to the "collectible" dolls that Wallace Berrie makes.
The company is also cashing in on Cabbage Patch Kids, making them as porcelain dolls for bookshelves and dresser tops instead of toy chests. Coleco Industries of West Hartford, Conn. makes the Cabbage Patch dolls.
Wallace Berrie was the Olympic licensee to make stuffed animals, known in the industry as "plush toys," depicting Sam the Eagle, the official mascot of the 1984 Games in Los Angeles.
But the bird, with its round beak, huge head and exaggerated fanny, didn't bring in much gold for Wallace Berrie. Like other companies involved in Olympic products, Wallace Berrie found the fever was short-lived and mostly restricted to Southern California.
"We came out as survivors," said Chief Executive Harris Toibb, 44, one of three partners in the company along with Elins, 38, and Executive Vice President Robert Solomon, 34.
Plush toys made Wallace Berrie's reputation, said De Masi of Giftware News. A nationwide survey conducted by the magazine in September found Wallace Berrie to be the top seller of gift plush toys.
"We helped bring plush out of the toy store and into department stores, greeting-card stores and drugstores," Elins said. "That opened the market up from just kids to everybody from the cradle to the grave."
Elins estimates that 60% of Wallace Berrie's plush toys are sold to people from 10 to 35 years old. He said the business of making stuffed animals and characters for grown-ups barely existed 20 years ago.
De Masi said the novelty gift industry, which is affected less by economic slowdowns than pricier gifts businesses, grew quickly during the 1970s, when, he said, people were forced to spend less on gifts.
Messages, such as the Christian themes on the $24 Precious Moments dolls, also account for much of the change, De Masi said. According to the Giftware News survey, Wallace Berrie's Precious Moments characters are the best-selling dolls, topping Coleco's Cabbage Patch Kids, which ranked fourth in the survey.
Whimsy also sells. A collection of stuffed animals from North American Bear Co. in Chicago, ranked third in the survey, features bear characters like Douglas Bearbanks, who sports a red satin smoking jacket and a paisley ascot.
Bearbanks is part of the VIB collection--for Very Important Bear, of course--that was developed seven years ago by Barbara Isenberg, who founded the company. Other creations include Humphrey Beargart and Lauren Bearcall.
"By using characters from old movies, we're not looking to sell our products to kids," said Nancy Fishman, a company spokeswoman. "We don't expect kids to know who Scarlet O'Hara was."
Sometimes the concept is as simple as "realistic cute," Toibb said. Wallace Berrie's pricey Avanti product line of stuffed animals from Italy includes a white-tailed deer fawn that looks like it might scamper away if someone got too close.
An Avanti German shepherd appears ready to pounce. More threatening, perhaps, is its $250 price tag.
Wallace Berrie designs all of its products at its Warner Center headquarters, where 250 employees also take care of inspections, marketing, distribution and customer support.
Another 50 work for Wallace Berrie Ltd. in Hong Kong, overseeing the manufacture, and 250 salesmen are scattered around the United States.
The company subcontracts manufacturing in Hong Kong, Italy and the United States, based on its own designs. Elins said he doesn't want to tie up capital by owning factories.
Elins joined Wallace Berrie in 1965, when it was still a small Van Nuys stationery and ceramic statue company and he was still in high school. Elins worked part time for owner Wally Berrie until he graduated from Valley State College in 1969.
Toibb said he "eked through 10th grade" before leaving his native Massachusetts to become a road salesman in the toy business. Toibb and Elins met in 1966 and, six years later, the two bought into the company, becoming partners with Berrie.
Elins said the three struck a deal in 1972 that Berrie would retire 10 years later, leaving Elins and Toibb with a controlling interest. Berrie did, indeed, retire in February, 1982, and Solomon, then vice president for sales, was brought in as a junior partner.
By November of that year, the company had purchased Warner Communication's Applause unit, which makes plush toys such as teddy bears and tigers, and merged the two companies. Last year, Wallace Berrie moved from Van Nuys to its new Warner Center headquarters.
Elins won't disclose how much the company has grown in recent years or give its earnings, but says it is very profitable. He says it has been growing more aggressively under the new management, in part because of licensing but also because of the popularity of message merchandise.