There were just too many out there and the novelty was gone. In 1988 when Coleco filed for bankruptcy, Hasbro took over production of the Cabbage Patch Kids.
If you're old, or maybe even not that old, you remember the Cabbage Patch Kids. He made these dolls look like real babies. Originally it was expected that the value of these dolls would someday reach astronomical proportions. Mattel then took Knit Fabric Manufacturers over production in 1994 and then finally in 2004 Play Along Toys and 4kids Entertainment took over making these things..
Your standard Cabbage Patch Kid was about 15 or 16 inches in height. What you probably don't know is what happened to these once hot items that have all but disappeared.
Part of the problem was that as the dolls started to gain in popularity the manufacturer of the time tried all kinds of gimmicks with the dolls instead of sticking with the original concept of a simple baby doll dressed in baby clothes that needed to be adopted. When Coleco toy company saw what a hit they were, they bought the rights to them from Roberts in 1982.