The ongoing legal battle between Nestlé, the Swiss multinational food and drink processing conglomerate, and the Mahagitsiri family -- widely dubbed the "Nescafé godfather" by Thai media -- is causing a stir in Thailand's instant coffee market.
Earlier this month, Nestlé was ordered by a Thai court to stop manufacturing, outsourcing production, distributing, or importing instant coffee products using the Nescafé trademark in Thailand.
A few days later, the Central Intellectual Property and International Trade Court reinstated Nestlé's right to use the trademark for its registered goods as of April 11, 2025.
The situation has shifted again, and it is uncertain whether the issue has been fully resolved.
Q: What's the source of the conflict?
According to a Nestlé statement, Nescafé was manufactured in Thailand from 1990 to 2024 through a 50:50 joint venture called Quality Coffee Products Ltd (QCP) owned by Nestlé and the Mahagitsiri family, including Prayudh Mahagitsiri.
Nestlé had management control of operations, production, sales and marketing, and the manufacturing technology used was Nestlé's proprietary intellectual property.
Nestlé decided to terminate its manufacturing licence agreement with QCP in 2021, according to local media reports.
The QCP joint venture agreement and the associated Nescafé licensing agreement as well as the related contract framework were terminated on Dec 31, 2024.
As a result, QCP no longer had the right to manufacture Nescafé products and the contract termination was validated by an arbitral award of the International Chamber of Commerce's International Court of Arbitration in Singapore, noted Nestlé's statement.
However, the shareholders have been unable to agree on the future direction of QCP, leading Nestlé S.A. to file a petition with the Bangkok South Civil Court to liquidate QCP on March 14, 2025. The court is considering the liquidation request, according to Nestlé.
Between the termination of the contract and the filing for liquidation, Nestlé supported all related stakeholders to ensure they are not affected, according to the company.
In March and April 2025, Chalermchai Mahagitsiri filed two separate civil cases with Min Buri Civil Court against Nestlé entities and their directors.
"Min Buri Civil Court granted an emergency injunction order in each case," noted Nestlé.
On April 3, Min Buri Civil Court granted an emergency injunction order prohibiting Nestlé from manufacturing, outsourcing production, distributing, or importing instant coffee products using the Nescafé trademark in Thailand.
A day later, Nestlé issued an official letter to inform trade partners nationwide that the company was unable to accept orders for Nescafé products with immediate effect until further notice. During this period, trade partners were still able to sell their existing stock of Nescafé products.
On the evening of April 12, local media outlets reported the Central Intellectual Property and International Trade Court ruled that Nestlé is the sole rights holder of the Nescafé trademark.
Nestlé issued a statement on April 13 noting the court order stated that Nestlé (Thai) Ltd has the exclusive right to use Nescafé and Thai name of the Nescafé trademark.
The company resumed full operations of Nescafé products in the Thai market on April 11, and is taking orders for Nescafé products.
Q: What is the next step in the legal process?
Milin Veraratanaroj, chairman of Tang Ngee Soon Superstore, one of the largest traditional wholesale chains in Udon Thani, told the Bangkok Post on April 10 that Nestlé contacted his store last year regarding its decision to end its partnership with the Mahagitsiri family.
On April 8, Nestlé released a statement expressing concern over the significant impact caused by the emergency injunction order issued by Min Buri Civil Court.
"We are filing a petition against the court order and submitting complete evidence related to the case," noted the statement.
"I was contacted on April 9 and asked whether my store could write a letter to Nestlé, detailing the impact we have experienced from being unable to sell Nescafé products," said Mr Milin.
He said he believes the letter will be used to support Nestlé's appeal against the injunction.
In the letter, Tang Ngee Soon Superstore stated: "The emergency injunction order has affected the company's sales, both directly and indirectly. Even though the company is not directly involved in the dispute, we have inevitably felt the impact. We kindly ask the court to consider implementing remedial measures to address this situation."
On April 17, Nestlé filed a petition with the president of the Court of Appeal for Specialized Cases to determine the jurisdiction of the case, claiming it should fall under the jurisdiction of the Central Intellectual Property and International Trade Court.
The counsel for the Mahagitsiri family said Nestlé's filing is simply a tactic to delay proceedings and does not relate directly to patent or trademark laws.
The Min Buri Civil Court permitted the Mahagitsiri family to submit counter-arguments by April 23, with a hearing on jurisdiction and Nestlé's request to revoke the injunction scheduled for June 20.
Q: What is the position of the Mahagitsiri family on the dispute?
On April 17, the Mahagitsiri family issued a statement noting Nestlé has refused to comply with the Thai court's order, instead pursuing legal action at the Central Intellectual Property and International Trade Court.
QCP accused Nestlé of distorting the court's ruling and misleading the public into thinking it can resume regular business operations.
To resolve the conflict, the Mahagitsiri family proposed QCP should either be allowed to continue producing Nescafé or produce coffee under its own QCP brand.
Q: Does this dispute impact the confidence of private foreign firms operating as partners with a Thai company?
Somchai Pornrattanacharoen, honorary advisor to the Thai Wholesale and Retail Trade Association, said when foreign companies assess the Thai market, good governance is a significant consideration -- much like in any market.
"However, the business opportunities available in Thailand are even more vital," he said.
If foreign companies perceive potential in the Thai market, they will continue to do business here, said Mr Somchai.
However, he said the Thai economic slowdown and decline in consumer spending may pose a greater concern among foreign investors.
Q: What's the scale and significance of Nescafé in Thailand's instant coffee market?
Nestlé reported Nescafé accounts for more than half of Thailand's robusta coffee sales annually. This coffee is primarily sourced from the southern region.
Nestlé refrained from providing specifics regarding a new Nescafé factory in Thailand, but reaffirmed its commitment to producing Nescafé products locally.
Nescafé is the market leader for instant coffee in Thailand, according to data from Finansia Syrus Securities Plc. For the 3-in-1 coffee segment, Nescafé commands more than 50% of the market share, while it ranks No.2 in ready-to-drink canned coffee with a 37% share.
Q: Has this dispute created an opportunity for other players?
A report by the Trade Policy and Strategy Office cited Euromonitor, valuing Thailand's coffee market at more than 34 billion baht in 2023. Instant coffee accounted for 84% of the total, worth 28.9 billion baht, while freshly brewed coffee was valued at 5.5 billion.
In an interview before April 12, Mr Somchai predicted if Nescafé products were off store shelves for an extended period, a revival may be insufficient to ensure the brand retains its market share prior to this dispute.
"Some consumers may switch to other brands, and not every ex-Nescafé drinker will return," he said.
Mr Somchai said when the market leader falters, competitors offering a similar level of appeal can grab market share.
Thailand is facing an economic downturn, which if it persists for 3-5 years could pave the way for more affordable coffee products to meet consumer demand, he said.
Mr Somchai also speculated on the possibility that the Mahagitsiri family could launch its own coffee brand, as the family has extensive knowledge of the industry and access to the machinery required to manufacture new products.
Mr Milin, the chairman of Tang Ngee Soon Superstore, said the dispute elevated the public profile of both parties, and if one were to introduce a new product, they would benefit from this heightened level of public awareness.
"In this market, there are always players exiting and new ones emerging to take their place. The market never stops changing," said Mr Somchai.
He said this legal dispute may not provide direct economic benefits for rival products containing caffeine, such as tea or energy drinks.
"Coffee drinkers will stick with coffee, while tea drinkers will continue to opt for tea," said Mr Somchai.
