Nestlé challenges Thai court ban on Nescafé production
Nestlé has expressed concern for small business owners following a court order prohibiting the production and sale of Nescafé in Thailand.
The company is preparing to file an appeal after Chalermchai Mahagitsiri, a shareholder in Quality Coffee Products Co., Ltd. (QCP), sought a temporary injunction. Yesterday, April 9, a report detailed that Chalermchai initiated legal proceedings at the Min Buri Civil Court to obtain a temporary injunction.
This resulted in the court issuing an order preventing Nestlé from producing, contracting for production, selling, or importing instant coffee products under the Nescafé trademark in Thailand. Consequently, Nestlé cannot accept orders for Nescafé products from retailers.
Nestlé has announced its decision to terminate the agreement that granted QCP the rights to produce Nescafé in 2021. This termination was legally validated by an international arbitration tribunal, effective from December 31, 2024.
Following the court’s decision, Nestlé has stated its intention to appeal, presenting complete information to the Min Buri Civil Court.
Nestlé has held exclusive ownership of the Nescafé brand since 1990, with production in Thailand undertaken by QCP, a joint venture equally owned by Nestlé and the Mahagitsiri family, of which Prayudh Mahagitsiri is a shareholder.
Nestlé controls the management, production, distribution, and marketing of Nescafé products, leveraging proprietary technology.
After the contract was terminated, shareholders of both parties could not agree on the future operations of QCP.
On March 14, Nestlé S.A. filed a petition with the South Bangkok Civil Court to dissolve QCP, a process currently under judicial review.
During the contract termination and dissolution process, Nestlé has endeavoured to protect stakeholders from negative impacts.
Between March and April, Chalermchai launched civil lawsuits against Nestlé subsidiaries and directors, resulting in the Min Buri Civil Court issuing temporary injunctions in two cases on April 3.
The court’s decision prevents Nestlé, the sole owner of the Nescafé brand, from producing, contracting for production, selling, or importing instant coffee products under the Nescafé trademark in Thailand.
Orders ban
Nestlé, having not been able to present its case before the court’s decision, has complied with the court order. A letter was issued to retailers across the country on April 4, informing them of the situation and stating that orders for Nescafé products could not be accepted until further notice. Retailers with existing stock can continue normal sales operations.
Nestlé is deeply concerned about the significant impact of the court order on small businesses, including coffee shops and street vendors, who will lack Nescafé products.
Adjustments in recipes and ingredients might alter the taste, affecting daily income. This situation also impacts the income of customers’ employees and suppliers within the Nescafé supply chain, who can no longer deliver raw materials, reported KhaoSod.
Thai coffee and dairy farmers are also affected, as they cannot sell their produce to Nescafé due to the ban on production in Thailand. Each year, Nescafé purchases over half of the robusta coffee beans grown in Thailand.
Millions of consumers in Thailand and Nescafé’s export markets will be without the product. Nestlé is fully committed to resolving this issue and is actively challenging the temporary injunction, providing comprehensive information to the Min Buri Civil Court.
[Nestlé remains dedicated to sustainable business practices in Thailand, offering various brands for over 130 years. From 2018 to 2024, Nestlé invested over 22.8 billion baht in Thailand and continues to invest for the benefit of consumers, employees, collaborating farmers, and business partners.
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