Nestlé Faces Legal Challenge in Thailand's Instant Coffee Market
A Thai court ordered Nestlé to stop manufacturing and distributing Nescafé products, but the company has since had its trademark rights reinstated
Nestlé, a Swiss multinational food and drink processing conglomerate, is embroiled in a legal dispute with the Mahagitsiri family in Thailand over the use of the Nescafé trademark.
The conflict began when Nestlé decided to terminate its manufacturing licence agreement with Quality Coffee Products Ltd (QCP), a 50:50 joint venture between Nestlé and the Mahagitsiri family, which had been producing Nescafé products in Thailand since 1990.The QCP joint venture agreement and the associated Nescafé licensing agreement were terminated on December 31, 2024. However, the shareholders have been unable to agree on the future direction of QCP, leading Nestlé to file a petition with the Bangkok South Civil Court to liquidate QCP on March 14, 2025.In response, Chalermchai Mahagitsiri filed two separate civil cases against Nestlé entities and their directors with the Min Buri Civil Court.
The court granted an emergency injunction order prohibiting Nestlé from manufacturing, outsourcing production, distributing, or importing instant coffee products using the Nescafé trademark in Thailand.Nestlé subsequently challenged the jurisdiction of the Min Buri Civil Court, claiming that the case should fall under the jurisdiction of the Central Intellectual Property and International Trade Court.
The company also released a statement expressing concern over the significant impact caused by the emergency injunction order.The Central Intellectual Property and International Trade Court has since ruled that Nestlé is the sole rights holder of the Nescafé trademark, allowing the company to resume full operations of Nescafé products in the Thai market.
However, the Mahagitsiri family has proposed that QCP should either be allowed to continue producing Nescafé or produce coffee under its own QCP brand.The dispute has raised questions about the confidence of private foreign firms operating as partners with a Thai company.
According to Somchai Pornrattanacharoen, honorary advisor to the Thai Wholesale and Retail Trade Association, good governance is a significant consideration for foreign companies assessing the Thai market.
However, he noted that business opportunities available in Thailand are also vital.Nescafé accounts for more than half of Thailand's robusta coffee sales annually, with the brand commanding over 50% of the market share in the 3-in-1 coffee segment and ranking second in ready-to-drink canned coffee with a 37% share.
The dispute has created an opportunity for other players in the market, with some predicting that consumers may switch to alternative brands if Nescafé products are off store shelves for an extended period.Thailand's coffee market was valued at over 34 billion baht in 2023, with instant coffee accounting for 84% of the total.
The market is expected to continue evolving, with more affordable coffee products potentially gaining traction in the event of a prolonged economic downturn.
The conflict began when Nestlé decided to terminate its manufacturing licence agreement with Quality Coffee Products Ltd (QCP), a 50:50 joint venture between Nestlé and the Mahagitsiri family, which had been producing Nescafé products in Thailand since 1990.The QCP joint venture agreement and the associated Nescafé licensing agreement were terminated on December 31, 2024. However, the shareholders have been unable to agree on the future direction of QCP, leading Nestlé to file a petition with the Bangkok South Civil Court to liquidate QCP on March 14, 2025.In response, Chalermchai Mahagitsiri filed two separate civil cases against Nestlé entities and their directors with the Min Buri Civil Court.
The court granted an emergency injunction order prohibiting Nestlé from manufacturing, outsourcing production, distributing, or importing instant coffee products using the Nescafé trademark in Thailand.Nestlé subsequently challenged the jurisdiction of the Min Buri Civil Court, claiming that the case should fall under the jurisdiction of the Central Intellectual Property and International Trade Court.
The company also released a statement expressing concern over the significant impact caused by the emergency injunction order.The Central Intellectual Property and International Trade Court has since ruled that Nestlé is the sole rights holder of the Nescafé trademark, allowing the company to resume full operations of Nescafé products in the Thai market.
However, the Mahagitsiri family has proposed that QCP should either be allowed to continue producing Nescafé or produce coffee under its own QCP brand.The dispute has raised questions about the confidence of private foreign firms operating as partners with a Thai company.
According to Somchai Pornrattanacharoen, honorary advisor to the Thai Wholesale and Retail Trade Association, good governance is a significant consideration for foreign companies assessing the Thai market.
However, he noted that business opportunities available in Thailand are also vital.Nescafé accounts for more than half of Thailand's robusta coffee sales annually, with the brand commanding over 50% of the market share in the 3-in-1 coffee segment and ranking second in ready-to-drink canned coffee with a 37% share.
The dispute has created an opportunity for other players in the market, with some predicting that consumers may switch to alternative brands if Nescafé products are off store shelves for an extended period.Thailand's coffee market was valued at over 34 billion baht in 2023, with instant coffee accounting for 84% of the total.
The market is expected to continue evolving, with more affordable coffee products potentially gaining traction in the event of a prolonged economic downturn.
