You either like them or hate them," says Peter Petrie of his mugs, adding cheerfully, "but sometimes people who hate them buy them too."

All the mugs are hand-crafted and present the same bulbous-nosed, scraggily bearded face. Petrie, 41, knows that physiognomy well. "It's the way I look some mornings." Customers, he notes, sometimes "come up and tweak the nose and even give it a little kiss before I wrap them up."

Petrie's Mr. Muggs coffee cups (plus beer steins, sugar bowls and similar products) have become quiet best-sellers, now stocked by nine department stores and 25 gift shops across the U.S. In New York Bloomingdale's sold 3,750 at Christmas alone (at $8.50), and Petrie's Muggs Pottery Limited last year grossed $80,000.

Petrie's pottery business started as therapy. After a serious lung operation, the former General Motors auto worker in Detroit began working with clay to build up a weakened right arm, got hooked on the craft and eventually moved on to Greenwich Village. He lost money on his pottery shop until he turned over its management to Susan Clemons, a waitress next door. She impressed Petrie "because she was doing four jobs at once—waitress, bartender, busboy and cashier." They acquired a marketing manager, and the mugs really began to move. The company is producing 300 of them a day in a renovated New Hampshire chicken house and next month will shift operations to bigger quarters in Portsmouth. The merger worked in other ways. In June Peter and Susan plan to marry, and a new Petrie line is in the offing. Mrs. Muggs, perhaps?