Last Friday, the Financial Times brought to light the fiasco that has befallen OW Loeb, one of London’s foremost fine wine importers and distributors. It described the circumstances under which the business, which was purchased in 2014 by Marlon Abela, the prolific restauranteur behind The Greenhouse, Morton’s, Umu, and most recently The Square, fell from grace with its clients — both customers and wine growers alike.
The Financial Times notes that when Abela bought OW Loeb, those who knew the company were optimistic: “This is fantastic,” a former employee is quoted as saying, “somebody with lots of money who loves wine, willing to make Loeb a much better company.” Nevertheless, by the end of 2017, the company had suffered a slew of resignations — including a number of directors — and it was becoming apparent that that optimism had not converted into prosperity. The company reportedly attributed this upheaval to a voluntary restructuring it said was aimed at better integrating operations at Loeb with Abela’s other ventures, however the FT questions this justification with reference to “a pattern of late payments, tax difficulties and legal disputes that have made other businesses reluctant to work with Loeb or the restaurants.”
Wine writer Jancis Robinson, in a supplementary op-ed for the FT (which was also published on her blog), suggested that perhaps the exodus of staff had more to do with “the frequency of emails and calls from worried growers,” or winemakers, who were pursuing OW Loeb for unpaid allocations, that had made working at the company “so demoralising.” Wine growers, some of them apparently owed tens of thousands of pounds, were hit hardest; some began looking for new representation in London, others threatened litigation. Others still just worried about whether they’d be able to afford to pick the coming harvest. On the other hand, individual investors who had paid thousands for new vintages en primeur (pre-release), now had no way of knowing if they’d ever receive the wine they’d bought.
While Abela acknowledges there have been struggles with OW Loeb — he said the business “has not turned out to be as profitable as was anticipated” — it appears that the troubles at Loeb are symptomatic of a larger issue with Abela’s company than just the challenge of selling premium wines in an uncertain economic climate.
At year end 2016, Abela’s restaurants collectively owed his wine businesses £3 million, while MARC Ltd — his primary restaurant group company — accrued before-tax losses of £46.9 million between 2008 – 2016. Abela may have told Eater in November that the restaurant business is a game of “survival of the fittest,” but his company’s reliance on his loaning it cash to “meet its day-to-day working capital requirements” indicate that MARC Ltd’s apparent success looks like a story of deep pockets as well.
A statement from MARC issued to Eater London said:
“O.W.Loeb has a bright future with a new management team taking the business forward. The multi million pound investments we have made in the business underpin our passion for, and commitment to, O.W.Loeb, one of the great names in the UK wine business with a proud history and heritage. O.W.Loeb intends to honour its commitments their clients and is in the process of doing so. O.W.Loeb remain deeply committed to their customers, suppliers and indeed to the success of the business.”
Abela’s house of cards may not be falling yet — after all, as he said, “there are always corrections in the market” — but cracks are emerging in the façade. Eater NY reported yesterday on the closure of all three of MARC’s Payard Bakery locations in New York City. A statement from the company said that it was “assessing and reconfiguring its U.S. businesses”; a similar reason as was given for the demise of A Voce, another MARC venture which closed its premier location in NYC last year, after 13 years in the city. Today, the MARC website is down (because it is being “redeveloped”), and Companies House filings show Abela resigned as director of OW Loeb on 10 January.
The turmoil surrounding Abela raises some flags for the restaurant industry, particularly at the high end where, as Robinson put it, “it is generally acknowledged... that the higher the [Michelin] ranking, the harder it is to make a profit.” In defending the decision to open a new high-end restaurant in Mayfair, Abela described The Square as “a project with a defined vision”, asserting that “we will execute that vision in order to survive.” The question is, what cost — financial or otherwise — is he willing to incur in executing his visions?
MARC also confirmed to Eater London that “it is business as usual at all of [its] restaurants.”
- Venerable London wine merchant imperilled by new owner [Financial Times/Paywall]
- Why a historic wine company has been hit by controversy [Financial Times/Paywall]