Opening day of the Sneezy sale was a madhouse. By 11 a.m., the sales board was filled with scribbled numbers, dealers had tied up phone lines trying to place orders and those who did get through had gobbled up $1.5 million worth of the silver medallions.
By day's end, orders had been placed for $2.5 million worth of the Rarities Mint "Sneezy," the fifth in a series of 11 medallions based on the key characters in Walt Disney's classic, "Snow White and the Seven Dwarfs."
The coin-sized medallions, minted and issued by Rarities in an exclusive deal with Walt Disney Co., were expected to bring in $2.5 million when the agreement was signed last year. So far, with six more from the Snow White series to go, Anaheim-based Rarities has grossed $25 million.
Something the experts call "Disneyana demand" caught Rarities owner Ian Simpson by surprise and has given him a production challenge he has never before faced at his 10-year-old mint, which claims to be second only to the federal government as the nation's largest minter of proof sets--newly minted coins or medallions made specifically for collectors.
Simpson, 36, said his father, grandfather and great-grandfather were jewelers, but he branched from that field into the private mint business because he decided that the growing popularity of minted, limited-production proof sets would make him more money than gems while practicing the jewelry craft.
Simpson set up shop in Anaheim as a one-man operation in 1977 and began designing and manufacturing commemorative proof sets featuring George Washington and U.S. Bicentennial themes.
The company also produced medallions for the 1984 Republican national convention and struck proof sets featuring a space shuttle and Halley's comet. The company gained exclusive rights three years ago to produce a gold medallion for the state of California.
Don Paul Nay, Rarities' sales manager, said the secret of success in the private minting business is to identify popular commercial characters and obtain the rights to produce proofs bearing their images. For Rarities, the Disney proofs are the first "character" sets. Their popularity has dwarfed that of past offerings.
Ironically, Rarities' recent success resulted from its biggest failure, the official California gold piece that Rarities began minting for the state in 1984.
"We've spent nearly $1 million on it, but the state hasn't marketed it," Simpson said. The state exempted the medallion from sales tax because it earns royalties from each sale, but the state never intended to be its marketer, said John Babich, deputy director of the state Department of General Services. So, Simpson said, the existence and availability of the quarter-ounce, half-ounce and one-ounce gold pieces is never mentioned in state promotional campaigns devised in Sacramento.
Despite slow sales of the California gold piece, Rarities' status as official state minter helped boost its reputation and was a factor in the Disney contract.
Simpson said sales from the Disney commemoratives will make Rarities solidly profitable and will boost revenue to $50 million in the privately held company's current fiscal year, which began this month.
He declined to give further financial information about the company, which recently increased its employees to 70 to handle the crush of orders for the Disney medallions.
Because of the demand, dealers' supplies are being rationed and Rarities is being pressured to produce larger runs of each of the Snow White proof sets. Simpson, however, said he will not increase the number of medallions in each limited edition because it would decrease their value.
Rarities produced 20,000 one-ounce silver "Sneezy" pieces, which retailers price at $35, nearly double the wholesale rate. Also minted were 20,000 half-ounce silver pieces, 5,000 five-ounce silver pieces, 5,000 tenth-ounce gold pieces and 3,500 quarter-ounce gold pieces.
There is no guarantee that Rarities can match its current success, but Simpson is optimistic. He said he has snagged licensing agreements to produce proofs tied to the Hollywood Walk of Fame, characters from the "Peanuts" comic strip and the 10th anniversary of the movie "Star Wars."
Foreign Sales Seen
Simpson said he also plans to export Disney commemoratives and California gold pieces to Japan.
Terry Gram, owner of Stamps & Coins at Hobby City, a Rarities dealer in Anaheim, said foreign buyers are a reliable barometer of success. They are cautious purchasers, he said, but are wild about Disney.
"When they buy, I buy," Gram said.
With the success of the Disney proofs has come the dilemma of meeting production and quality demands while maintaining delivery deadlines.
Some of Rarities' 300 dealers complain that deliveries have trailed orders by as long as 10 weeks--which can cause crippling cash crunches, because dealers generally have to make up-front payments on orders.