A court’s temporary injunction prohibiting the sale of Nescafé products in Thailand may lead to a potential shortage if the situation continues, according to Tang Ngee Soon Super Store Co., a prominent wholesale and retail chain in Udon Thani.
Nestlé is requesting that retailers submit letters detailing how the injunction is impacting their operations.
In a statement from Nestlé Thailand, it was noted that Nescafé is produced locally through a joint venture, Quality Coffee Products Ltd (QCP), which is jointly owned by Nestlé and the Mahagitsiri family.
However, the joint venture agreement ended on December 31, 2024, and the shareholders have been unable to agree on the future direction of QCP.
The court injunction currently prevents Nestlé from manufacturing, outsourcing production, distributing, or importing instant coffee products that utilize the Nescafé trademark in Thailand.
Milin Veraratanaroj, chairman of Tang Ngee Soon Super Store Co., mentioned that Nestlé had contacted the store last year regarding its decision to terminate its contract with the Mahagitsiri family.
He indicated that Nestlé must still serve the Thai coffee market, which may result in importing products from countries such as Vietnam and Indonesia to meet local demand during this period.
“I was contacted on April 9 and asked if our store could write a letter to Nestlé outlining the impact we are facing due to the inability to sell Nescafé products,” he explained, adding that he expects this letter to be used in an appeal against the court’s injunction.
Normally, Nescafé products are delivered to stores nationwide on a monthly basis. Some wholesalers have received stock shipments for April, but if the injunction continues, certain stores may not receive new supplies and could begin sourcing Nescafé from alternative providers.
Some retailers may also start stockpiling products, he added.
He noted that the extent of the Nescafé shortage in Thailand will depend on how long the temporary injunction remains in place.
If the order is lifted soon, allowing Nestlé to resume normal distribution, the supply shortage may be minimal. However, if the court maintains the injunction, a prolonged shortage could occur, considering Nescafé’s significant share of Thailand’s coffee market.
In the worst-case scenario, if the injunction persists for months, other brands might attempt to capitalize on the opportunity, although they may not have the capacity to meet the total demand, as increasing production capacity takes time.
If the injunction lasts for four months, it could disrupt the Thai coffee industry significantly, with alternative brands struggling to satisfy demand.
