Bangkok, Thailand – Nestlé, the global food and beverage giant, has strongly reaffirmed its long-term commitment to producing its flagship Nescafé coffee brand in Thailand, following a decisive court ruling that upholds its exclusive trademark rights within the Kingdom. This development comes amidst a complex legal dispute with the Mahagitsiri family, shareholders of its former joint venture manufacturing partner, Quality Coffee Products Co., Ltd. (QCP). Despite the challenges, Nestlé emphasizes its continued investment in Thailand, its unwavering support for local coffee farmers, and its strategic plans to resume full Nescafé production locally, ensuring Thai consumers face minimal disruption.
Thailand’s affinity for Nescafé, the nation’s leading coffee brand, is deeply intertwined with Nestlé’s decades-long presence in the country. For over 40 years, the company has not only catered to consumer tastes but has also played a significant role in the local agricultural economy by consistently purchasing raw coffee beans, primarily Robusta, from Thai farmers. This commitment continued into early 2025, demonstrating an ongoing dedication even as significant operational changes were underway.
The core of the recent turbulence stems from the conclusion of a long-standing manufacturing agreement. Between 1990 and the end of 2024, Nescafé products for the Thai market were produced under contract by Quality Coffee Products Co., Ltd. (QCP). This joint venture, established originally with Mr. Prayudh Mahagitsiri, saw the Mahagitsiri family holding a 50% stake, with Nestlé holding the other 50%. Crucially, however, Nestlé maintained full operational control. It managed the manufacturing processes, distribution, sales, and marketing of Nescafé in Thailand. Furthermore, the specific coffee recipes and the production technology employed were proprietary intellectual property belonging solely to Nestlé, and the operational management teams consisted entirely of Nestlé personnel.
Upon the natural expiration of the QCP contract on December 31, 2024, Nestlé opted not to renew the agreement. This decision was subsequently validated by the ICC International Court of Arbitration in December 2024, which ruled that Nestlé had acted appropriately in respecting the Joint Venture Agreement terms and that the contract termination was legally valid and binding.
However, the path forward encountered significant legal obstacles initiated by QCP shareholders, led by Mr. Chalermchai Mahagitsiri and his family. Instead of accepting the arbitration outcome, they pursued legal action in the Thai courts, filing for a temporary injunction with the Minburi Civil Court. Notably, Nestlé asserts it was not given an adequate opportunity to present its counter-arguments or the binding Arbitration Award before the Minburi court issued a surprising order on April 3, 2025. This injunction temporarily prohibited Nestlé (Thai) Ltd. from producing, selling, or even importing Nescafé products into Thailand.
The ramifications of the Minburi court’s order were immediate and widespread, causing significant disruption. Nestlé expressed deep concern regarding the impact on its supply chain, particularly affecting small business operators, retail partners, suppliers, and, crucially, the Thai coffee farmers reliant on Nestlé’s purchasing. The company had to temporarily suspend the distribution of all Nescafé products, leading to potential shortages and uncertainty in the market. Nestlé firmly refutes any suggestion that this disruption was a manufactured marketing tactic aimed at increasing prices, stating it was a direct and unavoidable consequence of the court order.
In response to this critical situation, Nestlé swiftly sought legal recourse. The matter was brought before the Central Intellectual Property and International Trade Court (IPIT Court). On April 11, 2025, the IPIT Court issued a pivotal order (Black Case TorPhor 58/2568) affirming that Nestlé (Thai) Ltd. possesses the exclusive right to use the “Nescafé” trademark in Thailand. This ruling effectively superseded the Minburi court’s temporary injunction, granting Nestlé the legal clearance to resume full operations for its Nescafé products within the Thai market.
Following the expiration of the QCP contract and navigating the subsequent legal challenges, Nestlé had already put contingency plans in place to ensure continuity of supply for Thai consumers. These measures involved outsourcing Nescafé production to other capable manufacturing companies within Thailand. Additionally, due to the initial need to bridge production capacity gaps – exacerbated by the legal hold-up – Nestlé temporarily imported some Nescafé products from neighboring ASEAN countries where it operates manufacturing facilities. This was always intended as a short-term solution.
With the favorable IPIT Court ruling secured, Nestlé is now actively preparing to re-establish and ramp up its Nescafé production capabilities within Thailand. While specific details regarding potential new facilities or timelines have not been disclosed (“We are committed to manufacturing Nescafé products in Thailand, but we cannot share the details at the moment,” the company stated), the intent is clear: Nestlé is committed to local production for the long term.
Crucially, Nestlé emphasizes that even during this transitional period and preparation phase for resuming full local manufacturing, its commitment to Thai coffee farmers remains steadfast. The company intends to continue purchasing as many raw coffee beans as possible from its long-standing local farmer partners, mitigating the economic impact of the recent disruptions on this vital part of their value chain.
Nestlé is keen to differentiate this situation from other historical instances in Thailand where brand owners have parted ways with local manufacturers. The company highlights that, unlike scenarios involving purely contract manufacturing, Nestlé not only owns the Nescafé brand outright but also held a 50% stake in QCP and actively managed all aspects of the Nescafé business in Thailand, including providing the proprietary recipes and technology. QCP, therefore, no longer possesses the rights to produce Nescafé products following the contract’s validated expiration.
Nestlé’s broader commitment to the Thai economy is underscored by significant historical investment. Between 2018 and 2024 alone, the company invested over 22.8 billion baht in its Thai operations across its various product categories. This substantial capital injection reflects Thailand’s importance as a strategic market for Nestlé. The company explicitly states its intention to continue investing in the country, benefiting its customers, consumers, employees, the agricultural sector through farmer partnerships, and its wider network of business partners.
Looking ahead, while the legal dispute with the Mahagitsiri family may continue through other legal avenues, Nestlé maintains it will act decisively to protect its operations and stakeholders. “Nestlé will continue to do everything we can to ensure that small operators, our suppliers, consumers and the farmers we work with will not be affected by the actions of the mentioned shareholders,” the company affirmed.
The recent IPIT Court decision provides critical legal clarity, allowing Nestlé to move forward with its plans. The focus now shifts to operational execution: re-establishing robust local production, maintaining strong relationships with Thai coffee suppliers, and ensuring the seamless availability of Nescafé – Thailand’s preferred coffee brand – for consumers across the nation, reinforcing Nestlé’s message of enduring commitment despite recent adversities.
#Nestle #Nescafe #Thailand #Investment #BusinessNews #ThaiEconomy #CoffeeIndustry #LegalDispute #IntellectualProperty #CourtRuling #SupplyChain #Agriculture #Mahagitsiri #QCP #ForeignInvestment #FMCG
