Masterclass With the King of Fragrance

Speaker 1:
Welcome to TD Cowen Insights, a space that brings leading thinkers together to share insights and ideas shaping the world around us. Join us as we converse with the top minds who are influencing our global sectors.

Oliver Chen:
This is Oliver Chen with TD Cowen's retail visionary series, which features visionary people and ideas. I'm excited to be here with Harry Slatkin. Harry's an entrepreneur and philanthropist. The New York Times called him the king of home fragrance and celebrities like Oprah Winfrey and Elton John use his home fragrances. As the founder and creative force behind Slatkin + Company, a home fragrance brand, Harry is regarded as one of the foremost country's fragrance experts. Harry, thanks for being with us today.

Harry Slatkin:
Oh, an honor to be here, Oliver. Good to see you again and thank you for including me.

Oliver Chen:
Of course. Our pleasure. To start, we'd love to hear about your founding story of Slatkin + Company, which has five brands. What made you start the company and what were some key milestones?

Harry Slatkin:
Well, it started by accident. So I started my first company with 15, but you'll have to have me back for a different podcast because that'll take up too much time. But after that company, I decided to go to Wall Street and finance because all my friends were. So I went to Bear Stearns and I was working there, and the man who had the office next to mine was getting engaged. And he asked, "Would you come to dinner with my fiance?" So I said, "Sure." And at the end of dinner she turned to me and said, you know... His name was Arthur. And she said, "You know, this is good for Artie, but you're more creative than that. You should be doing something more creative."
And it turned out it was Veer Wang that he was getting married to and Vera and I are best friends. And it was really because of her saying that that made me realize that you're right, just financial was not something I found creative. A lot of people do. Right? I mean, if I was sitting with a friend like Steve Schwarzman, he finds that creative. For me, being stimulated is by the arts, by the love, the passion, the smells. So that's how the candle business started. Laura and I were getting married at the same year and we decided to both leave finance to start Slatkin + Company.

Oliver Chen:
What are your thoughts about the next future of the candle business and how this will evolve? And could you speak to the brands under your portfolio and how they're positioned.

Harry Slatkin:
Sure. So as you know, when we built Slatkin + Company 32 years ago when we started, we were the pioneers in home fragrance. There were only two French imports and those were only really lit if you were having guests over. You weren't using it as your every day. And then you went all the ways down into what I call the true speaking down mass level.
So when we started, Women's Wear Daily wrote a full page on us, and the next thing you know, we got asked to do the home fragrances for 150 brands. So we created Slatkin + Company launching at Saks as Rose Marie Bravo not on the home floor in cosmetics. And then the next thing you know, we were doing the home fragrance for Ralph, and Nars, and Laura Mercier, and Chopard, and Vera and Tory and Christian Dior. And we helped change what the industry has thought of today. Especially, we sold the company to Les Wexner Limited Brands, and I then went with the company and I started when I got there with a hundred million dollars in sales at Bath and Body Works. It was called White Barn Candle named after his street in Columbus, Ohio he lives on. And I took it from a hundred million to a billion three in five and a half years. And now today, it's the largest, over three billion in home fragrance. And I was very proud of doing that.
And when I did that, then my wife kept all those 150 brands and when her non-compete was up, she started NEST, which is now the number one home fragrance business in America. And she has personal care. She just won Best Scent of the Year last year at the Fragrance Foundation, which is why I'm here because I came to visit you and the Fragrance Foundation awards are tomorrow night.
So that's really been the voyage. Underneath me now, it all started, I'm an entrepreneur. So what happens with an entrepreneur is I decided after I left Limited Brands, I actually bought a fashion brand because I had a non-compete with my best friend who's Tommy Hilfiger called Belstaff and we did that for three years. The most exhausting three years of my life was fashion. Oh my God, the most exhausting. And I was never home. It was a worldwide brand. And then I decided to retire.
Again, I started, my first company I was 15, but my wife was having lunch with the number two at QVC at the time, and I thought I'd join because Doug Howe was a dear friend of ours, been to our house many times with Mike George, the CEO. And at the end of lunch he said, "You know, we've never replaced your home fragrance because I used QVC as a vehicle at Bath and Body Works to tell the consumers..." Excuse me for saying this on your podcast. "That this isn't the (bleep) you used to know it was."
So it really works so well. But when I stepped down from being at the company full time, I stopped doing QVC. So at the end of lunch, he says, "We'd love to have you back. We never replaced your home fragrance." I thought he was being kind and I woke up to a proposal Monday morning. So I said, you know what? I could do this in my sort of retired lifestyle. Well, the next thing you know we're off to the races. He left to go to Kohl's. He invited me for dinner with Michelle Gas, who was becoming the CEO. We ended up creating a bath and body line and home fragrance brand for them.
Friends of ours founded Home Depot, so we're having dinner at one of them was being honored, and it's called Ken Langone and Ken's Kids for Special Needs because we have that foundation for special needs. So I did all of Home Depot and here we are now with 40 accounts and five brands. And I do home fragrance, but now we have bath and body, and I'm going to tell you that bath and body in the next two years will be 40% of our business. So not just home fragrance.
But remember, I'm about scent, Oliver, and I'm about the science of scent because I deal with scientists who actually talk about how the brain can change through scent. So when I create a scent, there's much more than goes into it than just a lemon cello cupcake.

Oliver Chen:
What's happening with the science of scent? What are some major trends that you're following and will innovate in both of these categories, home fragrance as well as bath and body?

Harry Slatkin:
So I remember the first time my wife and I built a brain center with New York Cornell and Columbia University. And I remember we were with a bunch of Nobel winning doctors who study the brain. And the one that stuck out to me at that first dinner the most was Richard Axel who won a Nobel Prize for scent and how scent cures illness.
Now, I'm not going to tell you why it can cure illness through scent, but we smell before we do anything. So it's such a powerful moment. It goes to our brain through the synapses of our body, and we all know how important wellness is in every aspect of our life. Every aspect of our life. So to bring scent through wellness by feeding to the brain, relaxing the body, energizing it, for me, is probably my most key thing I do every day.

Oliver Chen:
What do you think younger customers want? They're also purchasing multiple fragrances. We like the category at large too. What's happening there?

Harry Slatkin:
So it's so funny you should bring that up. Obviously, we have five brands. We're launching two new brands and going after Gen Z. But I just came back and I actually, we were in Europe and I went for dinner with friends of ours who were American, but they were in Forte de Moment and she's 12 years old and at dessert no one was talking to her. So I finally said, "So tell me what interests you." And she said, "Beauty." I said, "Game on." Everyone switched chairs and we spoke.
Here's a 12-year-old talking to me about beauty. She was more knowledgeable than any place I've ever gone with an adult talking about the products. But in the mastige world, I call it mastige because I look at it as prestige in a mass world. She told me the body scrub she uses. She doesn't use makeup yet because she's 12. So her mother won't wear lipstick or eyeshadow. But when it came to her body, her moisturizers, her home fragrance, she knows her scents and she knows the quality of the product and don't give her a knockoff. Because we were talking about a knockoff of a brand that's out there that's doing really well right now. She said, "I won't buy the knockoff because that means it's cheaper ingredients and I want to make sure what I put on my body is the best."
So for me, that customer, so Gen Z, right, they grew up with home fragrance. They've grown up with a higher level of bath and body, right? They're not just going to the store and buying Dial. They're getting a higher quality offering. I didn't grow up with that offering when I was growing up. Maybe at Neimans you'd go in and you'd see a Laura Mercier product of bath and body, but in the mass world you didn't get that offering. They've grown up with that.
And home fragrance, I changed it. Bath and Body Works, the mall, building the largest home fragrance brand, we changed how that younger consumer family was using home fragrance. They weren't lighting it when they were entertaining. Now people light a candle to relax themselves on an everyday pleasure. Now they want their scent level to be at a higher level in bath and body. That 12-year-old proved this isn't over. The game's just beginning because that age group is just hitting now.

Oliver Chen:
What about your five brands? Could you speak to some of the highlights of the brands in your portfolio and how do you see this manifesting in bath and Body relative to home fragrance?

Harry Slatkin:
As I mentioned to you, I'm an entrepreneur, and the biggest word I've had to learn this past year is no. Because we're launching, we have home fragrance in all five brands, bath and body and three wear brands. We're launching auto, so we have now auto in it. I want to scent the world. I want to do everything that encompasses your lifestyle on a daily basis.
So for me, the five brands, I remember the first meeting when Ralph Lauren called us to do his home fragrance, and Ralph was in the first meeting. And that first meeting, I left dizzy because it was Ralph Lauren purple label, black label, RL, Polo and they asked me to do the home fragrance. I'm like, "Well, for which one?" And then as I started to go back into this, it sort of started with HomeWorx by Slatkin + Company. So I started with HomeWorx, which is my, if you want to call it my higher end brand that started on QVC. Now it's in many more places.
And then each brand started to speak to the consumer that it was going. Just like you may go into Bergdorfs and buy a piece of Ralph, but you're also going into Macy's and buying a piece of Ralph and their different brands under Ralph Lauren. So that's how we separated our brands. But every single product, whether it's a candle, a reed diffuser or a bath and body product, I personally, I call it birthing because it takes six to nine months. And I use, and accept and approve each one of them along the way. And that's my passion. That's what I love.

Oliver Chen:
Harry, what about the future of scents and fragrances and wellness and healthcare? What do you see happening with R&D and innovation and converging these topics?

Harry Slatkin:
Yeah, so I think it's a very topical conversation. Spas expanding. I mean, even if you look at the high end. Now, I just came back from Europe. Dior has taken over every spa from the Beverly Hills Hotel to Hotel du-Pape in south of France. So the idea of wellness always starts in the luxury area and then trickles down.
And now people in the mass, or as I call it mastige, are really paying attention to how to pamper their customer. You know, we were on every Oprah Winfrey Christmas show with our home fragrance. And what I loved about Oprah is she never spoke down to her consumer. And I call it a consumer because she had the broadest amount of people watching her. Well, it's about time mass woke up to the fact of not talking down and I like to say we're filling that void.

Oliver Chen:
What do you think about the scents that excite you most next, and how do you approach innovation and generating new ideas?

Harry Slatkin:
Well, new ideas come from within me as we travel, as I have conversation with friends. You and I were talking just as we were walking down, what are travels coming up. Keeping your eyes open at every given moment is important. Not just shopping the competition. Really getting out there and seeing how life is, talking to that 12-year-old at dessert. Really experiencing and that's what affects me.
And then I only work with master perfumers. So I was the first one to work with master perfumers in the home fragrance industry. That's the highest level you can get in fragrance because I knew no difference. I didn't know I should deal with a certain home fragrance perfumer. I only thought I want to deal with the best, the ones that are creating Christian Dior and Tom Ford and all of that. And Rodrigo who creates Tom Ford is creating a new scent for me right now.
And I'm proud that in the home fragrance world, I am the only recognized nose in the entire industry given to me by the Perfumers Association at their big annual dinner by Linda Wells, who used to be, at the time she was the editor-in-chief of Allure, the beauty Bible. So for me, where do I see scent going? Raise the bar, watch the ingredients, make sure that 12-year-old is talking about natural products, being environmentally friendly, being friendly to how you test your products.

Oliver Chen:
What do you see happening with your forecast of the category at large? We had so many years of awesome growth. Is it a tough comparison? What's going to happen?

Harry Slatkin:
I think we had that because everyone was staying home during Covid, right? I mean, so what did you do? You needed to create your environment, and so you lit a candle. But that trend has been going on now for a long time. And yes, I think you know me well enough Oliver to know I take all the credit for that. But I did because of what I did at Bath and Body Works. It wasn't just at Slatkin + Company when we were number one at Bergdorfs and in Neimans and Saks, but going into that mass or mastige world made it an everyday product that was accessible.
So for me, it's still growing. The home fragrance category is growing. The bath and body to me is about to go through a big explosion because for the first time you're seeing brands that are coming out in mass and mastige that are treating it as if you were in prestige. And so I think that's just the beginning for both. And when you've got this younger consumer who grew up with this more sophisticated world, well, they're big shoppers, right? Online and in store, but they're big shoppers.

Oliver Chen:
Yeah, I agree with you. We're seeing 10-year olds at Sephora and Ulta, and also with major skincare regimes and fragrance layering and skinification of hair.

Harry Slatkin:
And they know their products, they know their ingredients, and they'll tell you which one works on their skin and which one doesn't. It's amazing.

Oliver Chen:
Harry, what about distribution? How do you approach that? What are your favorite ways in terms of thinking about the future of your company?

Harry Slatkin:
We approach distribution really by, in the beginning, it started by who came to us, right? I mentioned that. QVC, Home Depot, all the places that had approached us, Kohl's. But now we're growing even more. CVS, Walmart. And it's like the first time, I remember when Les Wexner invited me to Columbus, Ohio. I'd never been in a Bath and Body Works. Remember I came from a snob world, Bergdorf, Neiman, Saks. So I'd never been in one. Of course, I knew Victoria's Secret because you'd have to be eyes blind if you didn't.
But I walked in and I got dizzy. My wife was behind me, and she almost had to prop me back up because I thought that's why Les bought my company and me. Why are you talking down? So when I walk into a store and I see an opportunity, I immediately as an entrepreneur, want to fix it. So pretty much if you were going to be in the home fragrance business, Oliver, knowing I created the number one luxury home fragrance business in the world because of Herod's everywhere we were, Slatkin + Company, then knowing that I grew the largest one in the world and knowing my wife owns the largest, pretty much, wouldn't you take a meeting from me to say at least let's pick his brain even if we don't use it? So we pretty much get the door open. Once we get the door open though, it's the quality of the product and the conversation, because social media now matters a great deal to support the brands once they get in. It differentiates us.

Oliver Chen:
Yeah, that's a great point. With this conversation, we talk a lot about community commerce and social commerce and tribes really loving brands. What do you see evolving with your community of home fragrance lovers?

Harry Slatkin:
What I love about it, people always say to me, and how do you feel with all the competition? How do you feel with people coming in the business? I love it. There's nothing better than competition, first, to keep you on your toes. Second of all, the more people in the industry that are raising the bar, the more people means that consumers are satisfied and going to be in that category in a broader way.
I can't tell you that my consumer's using only my Slatkin +Company brands. That would be a lie. I love the fact that they're using mine, I hope a majority, but they're using other brands because they've made it a daily ritual. And that means if they've made it a daily ritual, their children have made a daily ritual and that's the next to come. So for me, it's just the beginning.

Oliver Chen:
We are big proponents of also the beauty industry, which is quite emotional and innovative. How would you say your business intersects with beauty or not?

Harry Slatkin:
Very much so. I've always treated me as a fine fragrance home fragrance, and I treat my bath and body as a fine fragrance. So again, when I'm working with perfumers, I'm back to those master perfumers and creating not a scent. Oh, is there anything worse when you go in and you see a cherry scent and you smell it and it smells like cough syrup? No. It's creating experiences. It's creating things that take you away from your ordinary to make it extraordinary.
And the more people that start doing that, A, keep me on my toes. But I hope right now I'm keeping them on their toes because that changes the consumer mindset, and that's the most important part of all of this is the consumer. It doesn't matter what I say, it doesn't matter what anyone else says. We've got to care about the consumer and how they're being treated.

Oliver Chen:
Harry, the consumer is facing inflation, some cross currents. How do those pressures intersect with the trends you're seeing or what might happen?

Harry Slatkin:
Yeah. So I would be a fool not to say we keep an eye on it because it affects everyone's daily pocketbook, right? You're going to buy bread. In some of my places, are you going to buy bread and toilet paper or are you going to buy a scented candle? But I try and do it on all different levels because of the emotional impact that fragrance and putting the lifestyle in someone's home has.
So I try and be conscious price-wise, but I try not to compromise on what I put into a product. But I may buy, for example, if I was buying a product and I was buying vanilla, there's vanilla from all over the world. So I actually try and get my nose to buy the vanilla I find is best, but I may not buy Madagascar vanilla and I may buy vanilla from somewhere else. Same with jasmine. I might buy in my most expensive jasmine, which I do from Provence, and it grows off the cliff of the side. But my jasmine in other things may come from India, all over the world. So it's a sensibility, but I'm an escape. I'm definitely still a luxury escape for anybody in the pocketbook, but I'm an escape. And luckily, I see the consumer saying, bread, toilet paper and Slatkin + Company.

Oliver Chen:
Well, you talked about quality earlier. For consumers, what should they look for in terms of quality? What do you do to really drive that differentiation in your product?

Harry Slatkin:
So the first thing is the aesthetics. So what's going to draw to you a product is how it looks because most of the places you're looking at it with... Even if you're in brick and mortar and you're not online or you're not watching QVC, you're going to be looking at a product without smelling it. So does it attract aesthetically? I only design a candle for me, for my own lifestyle. If my lifestyle works for you, great. But I think I'm exposed in the arts enough that I understand that should be an OJ, right? It should be a tabletop moment closed as a candle, because you don't want to look at an ugly candle, an antiquated candle, something that looks like grandma's old jam jar, which to me is fooling the consumer. Every one of my candle glasses, my bath and body products, they're all custom-made. I will not buy off stock because it doesn't please me.
So for me, it's the aesthetics. Then your nose takes lead. As you start to open it, go to your favorites first. I'm a gourmand person. I helped create gourmand in-home fragrance, and now I'm doing it in bath and body. But if you love gourmands, go to gourmand first and find the one that you like the most. If you like a cake scent, if you like a sweeter jam scent, what do you like? Then try and push yourself to experience are you going to go to florals? Are you going to go to exotics? Your nose knows where to take you, but it's once you burn the candle or use the bath and body product, the experience is what you come back for. And I like to say once you try Slatkin there's no going back, because I will put my candle up to anyone in the entire industry and tell them I have a better burn I perfected over 32 years. I won more awards than anyone else in the home fragrance industry. I work with the master perfumers, the oils are the best. Same with our bath and body now.
So for me, it's the experience and the returning customer. And I stand in so many stores, Oliver hiding because I pounce from around it if they put it back to ask the consumer, "Why'd you put it back?" And I love to learn why they're putting it back. And if they buy it, I just have a smile so I don't bother them. But if they put it back, I kind of want to know what made you put it back? So it's really understanding, again, the consumer.

Oliver Chen:
You are very customer-centric and also as I know you personally, you're a lifestyle guy who really thinks about so many attention to detail. Last question. So as we think about the next three to five years, what's most exciting to you? You're seeing so much innovation and so many younger customers too.

Harry Slatkin:
I am. The conversation I had with that 12-year-old at dinner, those are the kind of things that are so exciting to me to know that my daughter, 24, right? So she grew up with home fragrance. I mean, for sure she grew up with home fragrance, but all her friends would come over and they would raid my candle closet. It was a very big closet because they wanted it. They were using it, they loved it. They did it to relax with homework.
Let's face it, the phone has changed our lives, right? Social media has changed our lives. Everything we do is fast-paced, you don't have time to think. Well, you've got to rest. They use it for homework. They use it to relax when taking a bath. So as the younger consumer progresses, getting to know that consumer and how to talk to them will probably be the most exciting thing in the next three to five years, because it's a different way. You can't fool this consumer. You just can't. You can't put it in a pretty package, give it GGs or LVs and say, done. You really have to be authentic to this customer in the sense of what's in it, how is it made, how does it smell? How does it treat? It's not just a pretty object.

Oliver Chen:
Harry, it was really wonderful to spend time with you. So many features here in terms of authenticity, next generation consumption, wellness and healthcare, and also how you think about lifestyle as it applies to candles, home fragrances, and new frontiers like bath and body as well. Thanks so much for your time.

Harry Slatkin:
Oh, Oliver, thank you for having me.

Speaker 1:
Thanks for joining us. Stay tuned for the next episode of TD Cowen Insights.

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