TWST: If you would, give us from your viewpoint, a quick summary sketch on the company, enough information that would put our readers into context as what you see as your business, and what you see as your company today.

Mr. Goergen: The way we describe ourselves is that Blyth is a leading designer, manufacturer, marketer, and distributor of an extensive line of candles and home fragrance products, including scented candles, outdoor citronella candles, potpourri, and environmental fragrance products. In addition, we market a broad range of related candle accessories and decorative give bags and tags, and through our 1997 acquisition of Sterno and Handyfuel Brands, Blyth is also the leading producer of portable heating fuel products. And we operate 28 manufacturing and distribution facilities in 10 countries in North America and Europe.

TWST: What are the key issues, or I guess the trends in this marketplace today, and what impact will they have on your company over the next year or two?

Mr. Goergen: I think the whole question is, as we've defined ourselves as a home fragrance business, the extent to which, and the form in which women would like to fragrance their homes, and the choice of products that we can offer, or that our competitors can offer. Clearly, that is a part of the fabric of America and Canada, and becoming so more and more in Europe. The fragranced candle grew very rapidly during the early 1990s and mid 1990s in the United States and Canada, and with our moves into Europe, we believe that there is an opportunity also to have fragranced candles become a convenient choice for home fragrance delivery in European homes. And if that works out, our growth will be considerable in Europe, as the penetration, or the share of market, of fragranced candles is much, much smaller in Europe than it in the United States and Canada. We estimate that in the United States, of the total candle market, 70% of the candles, at least, are fragranced, and in Europe it's closer to 5%, and that varies from country to country with the United Kingdom being the most developed at 25% to 35%. And that's because we and our affiliate, Colony Gift Corporation in the UK, have been working in that market for over 10 years.

TWST: What do you see as competition today? Are there many competitors out there that are consolidated niche marketers, or do you have to compete with a lot of retailers?

Mr. Goergen: I think there are three groups of competitors. One is those that manufacture, and then basically wholesale a product through various retail chains. That would be S. C. Johnson, with their Glade brand. They've made a product line extension from their aerosol air fresheners into candle air fresheners. Secondly, similarly, Dial has done the same thing with their Renuzit line into the air freshener candle market as a product line extension. A third is the CandleLite division of Lancaster Colony, which has been traditionally a strong candle manufacturer and marketer. And lastly, the Yankee Candle Company is the group with both their wholesaling and their retail stores in the specialty area. Those are really the big four, and with ourselves, the so-called 'big five' in this market. The second category of competitors would be relatively small, closely held, relatively inefficient, but normally family controlled, or closely held corporations whose sales would range from, say $5 million to $25 million, located throughout the United States. And the third category of competitors would be those chains, that, because they see our fragrance candle category as a growing and attractive one, have contracted for private label products, either from small, domestic contract manufacturers, or through imported products.

TWST: What are the changes, or the new ideas in marketing and distribution that you feel have to be attended to from your side, either items that you're currently using, or items that you have to grow into?

Mr. Goergen: We, as a consumer products company, are relatively unique, as we're in basically all of the various channels to reach the consumer in the United States, in Canada, and we're now developing it in Europe. Blyth is in the market which we would call 'mass', which is food, drug, and mass merchants. We're in the specialty chains, which you would think of the category killers like Bed, Bath and Beyond, and Mervin's, and Luxury Linens, Linen 'N Things, etc. And Blyth has brands in department stores, and all of the various ranges of department stores throughout the country. And lastly, we are in independent gift stores. In addition to these stores, what I would call traditional retail we also have our direct selling organization, PartyLite Gifts, which sells our products in the home. So therefore, we cover all of the channels. I think that the development by channel has been fairly extensive. There probably are very few stores which we would consider potential outlets for our products, who don't have some product form, whether its extensive or insignificant in their stores. Even drugstores, which have relatively limited space, will have some exposure to our products. I think the development of the channels has been fairly extensive in this country and in Canada, but relatively underdeveloped in Europe.

TWST: Are there other differences between the U.S. domestic market and the international markets that you're looking at, as far as the types of strategic partners, or perhaps the merger and acquisition opportunities, or other attributes that would distinguish the two markets?

Mr. Goergen: When we talk about international markets we are basically talking about countries that have fairly well-developed socio-economic structures, as the purchase of our product is discretionary, therefore there has to be a significant number, or a percentage, of the population that have discretionary purchasing power. So the primarily international markets, obviously, would be Canada and Europe, followed by a country like Japan. Other countries which are relatively underdeveloped with regard to discretionary purchasing power are future markets, whether they are in eastern Europe, South America, or other countries in Asia. Japan is a unique country in the way in which they use products in the home. And so far we've had a relatively undeveloped effort in Japan. So our primary markets, in our judgment, geographically are the United States, Canada, and Europe.

TWST: When you look out over the next 12 to 24 months, what are the specific accomplishments that are necessary in order for that time frame to be a success for your company?

Mr. Goergen: I think first and foremost is that we must continually introduce new products. New products in our business are new forms, new fragrances, new textures, new containers, anything which gives some distinction, and is in response to what consumers are interested in. Blyth does extensive market research in order to understand those kinds of trends. Those trends may include, currently, natural elements. They may include aroma therapy, and other current trends, so new products are truly, truly important. The second thing is continually improving the level of our customer service. I know it sounds like everyone should be doing it, but you must continually work on this, and to be able to deliver the orders on time, at the highest percentage of fill as you possibly can, which is always a challenge with a large number of stock- keeping units. Customer service is critical. So Blyth is constantly investing in information technology and those support kinds of customer services. Third, with regard to customer service, we are trying to develop various initiatives in using the Internet, not initially for the sale of candles to end users, but to use the Internet as an extranet for either our retailers or our PartyLite consultants. And so I would expect in the next 12 to 18 months to have some fairly well-developed initiatives, which will be operational in accomplishing two primary objectives: one, increasing the accuracy of the order to delivery system. In other words, the less times the order is touched, the higher a likelihood that you're getting a 100% accurate order. Also, a combination of better information for our organization through the timeliness of the Internet, and how it's interfacing with our various customer groups will improve our cost effectiveness, not only in inventory management, but in terms of what the market is demanding in color, product and form. Those are three important factors. The fourth is, given our growth, we must continue to invest in manufacturing equipment and distribution facilities to be able to deliver the products on an increasing scale.

TWST: How do you see your top management team evolving over the next year or two? Are there specific areas that you will be focusing on for changes or additions? What are the specific skills and the bench strength that you'll be relying on as you address these challenges and opportunities?

Mr. Goergen: We've recently taken some steps to consolidate our European operations; the acquisition of the minority position in Eclipse Candles, tendering for the remaining public shares of Liljeholmens, a Swedish public company that we made an investment in late last year and finally, increasing our ownership in Colony Gift Corporation, which heretofore had been a 50% investment, which will be 100% later this month. That combination of these companies, combined with some other efforts we're doing in Europe, gave rise to our need to put together a different structure. So we've recently named a corporate manager of Blyth's European affiliate group to give leadership and coordination to what we're trying to achieve in Europe. Secondly, we have been working towards strengthening our sales and marketing teams in both our retail and our direct selling operations. And we're very pleased by our ability to be able to recruit people, as well as to promote managers from within. So I think we're in pretty good shape. We always have some searches underway, but they will likely be coming on board in the next three or four months, but no major changes are expected in the management structure, or the top management in the next six months to a year.

TWST: At this point, how could the investment community improve its perceptions or understanding of your company? As you speak with analysts and investors, what are the misperceptions? What are the insights that you hear that you feel are skewed or improper, plus or minus?

Mr. Goergen: I think a couple of things. One is obviously that our company has experienced very, very rapid growth since 1990, and particularly since our public offering in 1994, with very high growth rates exceeding 30 and 40% compounded annually, both at the top line, as well as the bottom line. We've all realized that with size Blyth is approximately a $1 billion Companny , even at our current run rate. And therefore, organic gains of 20, 30% are less likely. However, I think that the appreciation of our very strong market positions in all of the various market segments in which we participate is not fully appreciated by the Street, and we need to work better at communicating that and we plan to do so. And the third area is that I think there still is some skepticism of whether or not we will be able to capture the potential, which we perceive to be in the European markets, by adding various kinds of fragrance products, in particular, fragrance candles, into the European home. Obviously, we feel pretty confident about Blyth's opportunity because of the work we've been doing over there the last five years. But again, I think there is an amount of skepticism about whether substantial growth is achievable. We have relatively aggressive goals. We would very much like to grow our European business at very strong double-digit rates. It will not happen this year. It will take us a while to get our act together and decide exactly what products we want to introduce in which markets. But we should begin to see that kind of growth in calendar year 2000. I think that the other factor that people have not fully appreciated is the extent to which candles, and fragranced candles, and other forms of home fragrances have become a part of everyday life in people's homes. The incidence of purchase is very widespread, particularly in American and Canada. Blyth has done research the last two years that indicates that when asked of women 'have you purchased candles in the last six months,?' 67% of a random sample will say that yes they have. That percentage ranks with women's purchases in the last six months very close to lipstick and face makeup, which means that candles are a fairly broad and relatively routine part of everyday life. I think that's an interesting development. Also, we believe that there is still growth in the overall category, even though the growth has slowed from its very, very high rates of the early '1990s.

TWST: What's your vision for this company, for this enterprise in five years? Give us a snapshot of what it will look like. How is that company, that enterprise different, or how has it evolved from the organization of today?

Mr. Goergen: You know, that's really hard to say because markets are continually changing. Clearly, candles and our other home fragrance products are not Internet technology, so we don't have quite that kind of rapid change in technology. But I would suspect that we will be seeing other closely related products, that our international sales will be approximately 30% of our total sales, that the profitability of our international activities will begin to more closely approximate our U.S. rates of profitability because we will not be entering as many countries in an investment spending mode. We will have a better sense of what Blyth's 'beachhead investments' in Brazil and in the Pacific Rim can do in terms of greater volume as those markets perhaps evolve into greater discretionary purchasing power. But we think that we, without question, can grow Blyth's business organically by at least 10%, if not higher. And we think that during the course of the next three or four years that Blyth will be making at least one significant acquisition each year in complementary product lines, either on this continent or in Europe, or perhaps someplace else, although probably less likely, which will provide additional meaningful growth in a complementary product line. So I'm guessing that Blyth's sales in five years could very well approximate $2 billion. And of course, if we make a larger acquisition, sales could be much more significant.

TWST: What then is the essential message today for investors? What are the highlights, the strengths that recommend an investor to buy in?

Mr. Goergen: One is that I think we have very strong market position. Our product is consumable. It's repeatable. Basically, I always say, 'Our razor blades burn.' We have a strong management team. We've proven that we've been able to raise margins during a period of very rapid growth, that we have good infrastructure in place, meaning that we've got an excellent cost structure vis-'-vis the industry on a worldwide basis, and that consumers, as best as we can tell from all our market research, like this market category and have embraced it. Therefore, we believe that our sales and earnings are relatively steady and predictable. The cash flow is strong. And after a rapid build-up of capital expenditures to cope with this rapid growth period, our capital expenditures now are at a rates about half our cash from operations. Blyth is expected to have significant free cash flow for either acquisitions or repayment of debt or, if it's appropriate and makes sense, share repurchases or dividends.

TWST: What have I overlooked? Are there thoughts or issues you would add that we have not covered?

Mr. Goergen: The only thing I guess I would say is that, at the current pricing of our company in the public market, the share price, we've gone from a relatively high-multiple price/earnings ratio to a relatively conservative one relative to our recent growth rates and that we have been told by investors that Blyth appears to be a very good 'value' play.

TWST: Thank you.

ROBERT B. GOERGEN Chairman & CEO Blyth Industries, Inc. 100 Field Point Road Greenwich, CT 06830 (203) 661-1926 jcasey@blyth.partylite.com

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