Cashing in on collectibles - CUI Inc

Nation's Business, Oct, 1994 by J. Tol Broome, Jr.

For Peter Hexter, ideas for new products can come in strange places and at odd times.

On a business trip to Wisconsin several years ago, for instance, Hexter spotted an old tobacco advertisement, a big tin sign, on the side of a building. "Right there," he recalls, "I knew there was a major marketing potential if I could find the right product line."

That prompted the 48-year-old former teacher and coach, whose company was already a major manufacturer of collectible steins, to develop a line of metal collectibles, such as tin containers and signs and metallic 'trading cards, for gift and collectible shops and direct mail.

For Hexter's company, CUI, Inc., of Wilmington, N.C., the move into metal products has paid off. Their sales have helped CUI grow 25 percent to 30 percent annually in recent years. Hexter, president and CEO, won't reveal sales figures but says, "I always thought a big company was $10 million, but we sailed by that milestone and never looked back."

Hexter's move into metal began with tin containers, such as the ones he makes for the Hershey Foods Corp.; a footballshaped container, for example, will hold football-shaped chocolates wrapped to look like footballs.

Then came metallic trading cards, which put CUI in a booming industry, according to Kit Kiefer of Professional Hobby Consultants, Inc., in New London, Wis., whose clients are trading-card manufacturers. Since 1988, the industry has grown from $330 million in annual retail sales to $1.5 billion, Kiefer says.

Already, CUI has produced limitededition "metal trading cards," with patented-process tin edges and backing, featuring a number of entertainment and sports figures. It is planning even more in the months to come, using licenses Hexter obtained for the steins over the years from professional sports.

Trading-card sets marketed by CUI since 1992 have focused on Elyis Presley, football legends such as Johnny Unitas and YA. Tittle, baseball icons like Willie Mays and Hank Aaron, and action shots from the "Star Wars" movies. In the works are sets featuring basketball great Michael Jordan, Orlando Magic star Shaquille O'Neal, and New York Yankees slugger Mickey Mantle. The first in a series of tin signs is just out, too, featuring well-known footbail players like Tittle, Gale Sayers, Ray Nitschke, and Dick Butkus. Each tin has a picture of the player, a narrative, and statistics. Depictions of more sports figures are planned.

The interest in sports is a long-standing one for the 48-year-old Hexter. After growing up in Hopewell, N.J., he graduated from Ohio Northern University with a bachelor's degree in economics in 1969, and he became a teacher and football and wrestling coach in Norwood, Mass.

But in 1981, he was lured back to Hopewell and a job in his family's business, which manufactured ceramic bathroom accessories. A year or so later, his father helped him start Concepts Unlimited, Inc., in nearby Pennington, N.J., to market beer and coffee insignia mugs to colleges.

The start-up generated $200,000 in sales the first year, but lost $100,000. In 1983, however, Hexter's fledgling company obtained a license to manufacture beer steins for Miller Brewing Co., increasing CUI's revenues in one year to $2. 5 million from $250,000.

In the late 1980s, CUI began to accumulate more than 30 licenses from professional football, baseball, and hockey leagues and the Coors Brewing Co. to produce coliectible steins. Today, CUI claims to be the country's largest producer of the steins.

Of CUI's four divisions'-- premium and ad specialties, wholesale, retail, and direct marketing--the fastest growing is direct marketing, which has increased 40 percent annually in recent years. CUI, now the company's legal name, has 75 full-time and up to 35 part-time employees. From its 45,000-square-foot facility, CUI can pro duce and ship up to 10,000 items a day.

"I try to run the company like coached," Hexter explains. "We've go talent in operations and accounting, which is the defensive side, and we've got talent in marketing and sales, which is the offensive side."