St. Paul company behind many tourist mugs grows at intersection of art and manufacturing

The founding family of 50-year-old Deneen Pottery of St. Paul is on a growth mission again.

"All dad ever wanted was to make beautiful mugs," said CEO Niles Deneen. "All I want is a good business that supports us."

Deneen was founded by potter Peter Deneen, a Luther College art graduate who apprenticed under the acclaimed late potter Marguerite Wildenhain at her Pond Farm Pottery in California.

But Deneen Pottery is more than an art collective.

"We're trying to step it up a little," said Peter Deneen, 72, in an understatement. "Orders are backed up several months."

Deneen Pottery recently invested more than $500,000 in a new kiln and related equipment that will fire up to 1,800 mugs. The bugs are still getting worked out.

Deneen Pottery plans to grow production from nearly 3,000 mugs per day to 3,400. And increase annual revenue from about $8.5 million to $10 million by 2025.

When Niles, 47, joined the business in 2005, the company's revenue was about $1 million.

Deneen Pottery is north of University Avenue in a century-old building and railroad yard once owned by railroad baron James J. Hill. A solar array adorns Deneen's roof in a restored complex acquired years ago for $1 million.

Deneen Pottery, which employs 90, struggled at times, including through a 1989 bankruptcy.

"The old saying is that you learn more from your mistakes and failures than successes," said Dean Suchy, Deneen Pottery's banker and president of CorTrust Bank of Minnesota. "Peter looked at the metrics. And the heartbeat. He knew how to tinker and make things work.''

Deneen mugs sell on its website for up to $29.

However, most of the business comes from wholesale operations that serve commercial customers that sell customized mugs to their customers. They include Portland, Ore.-based Original Pancake House, Another Broken Egg of Florida and Death Wish Coffee of New York. The fastest growing sector is state and national parks around the country.

"Their product is hand-made, quality mugs made in Minnesota and that has great appeal," Suchy said. "I'm impressed that they diversified revenue from new niches, in hospitality and state and national parks. Big customers. Niles is a good sales guy."

Gloria Stern, longtime manager of the Minnesota Historical Society's Split Rock Lighthouse store inside the state park of the same name on Lake Superior, sells up to 500 Deneen mugs a year.

"We found Deneen at a trade show years ago, and these mugs are sold to people all over the world," Stern said. "Every mug is touched by 24 pairs of hands, and has a date on it. We like their quality and that Deneen is a family-run business of integrity."

Niles Deneen is buying out his parents in a 10-year transaction that could cost up to $1.9 million, depending upon future success. His parents already granted him 40% ownership in 2020 for his accomplishments so far.

"My parents put everything they had into this company," Niles Deneen said, "including two mortgages on their [former Como Park] house. The sale is my parents' retirement. I better get this right."

Niles Deneen, a University of Minnesota track hurdler, earned a degree in design in 1999. He spent several years in Europe, working as a model and actor.

He came home in 2005 to a $14-an-hour job at Deneen, in shipping. He learned production and sales. He was promoted to CEO in 2020.

"Our life's work is in your hands," quipped Niles Deneen of the company credo. "And we need to perform well."

Under Niles, the company has expanded and grown profitably over time.

"The pole vaulters and hurdlers are the crazy ones on any track team," said Deneen, who relaxes with yoga and volleyball. "It's about consistency over intensity. Learning and improving. Listening. Mistakes happen. Don't get bent out of shape. Improve. Be happy."

Niles and Peter Deneen, still involved in design and production, give much credit to a loyal workforce. The minimum wage is $17 an hour, with medical insurance, a 401(k) retirement match and profit-sharing. Internal promotion is stressed.

The company retains ergonomic experts who analyze how workers perform and recommend changes and exercises in a health studio to prevent injury.

About 65% of the workers are Hmong. Many are related in what truly is a family business.

Xiong Lao, whose father also works at Deneen Pottery, decided to leave Deneen a few years ago when his wife pursued an advanced degree in optometry in Milwaukee. She wanted Xiong to help care for a child and thought he could find a temporary job nearby.

Peter and Niles Deneen understood, but didn't want to lose the talented leader of the finishing line, even for a couple years. They made the Lao family an offer.

"More money and flexibility," said Lao, who spent long weekends in Milwaukee and is now Deneen's production manager. "I love working at Deneen Pottery. I love the craftsmanship. And they are generous with employees."