Coffee Crisis Looms as Court Halts Nescafé Production in Thailand

 

Retailers across Thailand are bracing for a potential shortage of Nescafé instant coffee after a court order temporarily halted its production, manufacturing, sales, and importation into the Kingdom.

 

The Minburi Civil Court issued a temporary injunction on April 3rd, 2025, prohibiting Nestlé, the sole proprietor of the Nescafé brand, from engaging in any business activities related to Nescafé products in Thailand.

 

The order came following legal action initiated by Chalermchai Mahagitsiri, a shareholder in Quality Coffee Products (QCP), the former Thai manufacturer of Nescafé.

 

The court's prohibition has sparked fears of widespread shortages across various sales channels, from major supermarket chains to small independent shops and mobile street vendors.

 

Milin Veerarattanaroj, chairman and managing director of Tang Ngee Soon Superstore, a major wholesale and retail operator in Udon Thani province, warned that even a three-day absence of Nescafé products would cause substantial losses.

 

"Just three days without the product causes massive losses," he explained. "Normally, Nestlé delivers Nescafé coffee products to our stores at the start of each month for sale to our customers."

 

Tang Ngee Soon generates between 300 to 400 million baht annually from Nescafé sales. The company now fears panic buying as retailers from neighboring provinces rush to secure dwindling supplies.

 

"Imagine the scenes during a flood or other event when people scramble to buy goods. It will be like that," Milin predicted.
 

 

Despite these concerns, the Ministry of Commerce has offered assurances that a nationwide shortage is not anticipated.

 

The conflict stems from Nestlé's termination of its agreement with QCP, which had manufactured Nescafé in Thailand since 1990. Nestlé claims the termination, which took effect on December 31st, 2024, was legally sound and backed by a ruling from the International Court of Arbitration.

 

QCP was established in 1989 as a 50/50 joint venture between Nestlé and the influential Mahagitsiri family. Under this arrangement, Nestlé held authority over management, production, distribution, and marketing of Nescafé products, with the manufacturing technology being Nestlé's intellectual property.

 

After the agreement ended, the shareholders couldn't reach a consensus on QCP's future operations. On March 14th, 2025, Nestlé S.A. filed a petition with the Bangkok South Civil Court seeking QCP's dissolution.

 

Between March and April 2025, Chalermchai Mahagitsiri filed two civil lawsuits against Nestlé's subsidiaries and directors in the Minburi Civil Court, resulting in the temporary injunctions.

 

Nestlé claimed it wasn't given the opportunity to present its case before the injunction was issued but stated it respects the law and is complying with the court's directive. The company is now filing an objection and submitting comprehensive information to the Minburi Civil Court.
 

 

On April 4th, 2025, Nestlé notified customers and retailers that it would be unable to accept further orders for Nescafé products until further notice. Retailers with existing stock can continue selling it.

 

The company expressed concern about the far-reaching consequences of the court order, including:

• Loss of income for small-scale retailers, including independent coffee shops and mobile vendors
• Impact on Thai coffee farmers, as Nescafé purchases over half of Thailand's total Robusta coffee bean harvest annually
• Disruption to employees within Nestlé's customer and supplier network

 

Nestlé emphasized its commitment to resolving the situation and is pursuing legal avenues to overturn the temporary injunction.

 

According to data from the Department of Business Development, QCP generated total revenue exceeding 17.1 billion baht in 2023, marking a growth of 10.69%, while its net profit stood at over 3.4 billion baht, reflecting a decline of 8.14% from the previous year.

 

Nestlé highlighted its 130-year presence in Thailand, noting investments of over 22.8 billion baht between 2018 and 2024, and affirmed its commitment to ongoing investment in the Kingdom.