A court’s temporary injunction prohibiting the sale of Nescafé products in Thailand could lead to a potential shortage if the situation persists, according to Tang Ngee Soon Super Store Co, a leading wholesale and retail chain in Udon Thani.
Nestlé is asking retailers to submit letters explaining how the injunction is affecting their operations.
According to a statement issued by Nestlé Thailand, Nescafé is produced locally through a joint venture, Quality Coffee Products Ltd (QCP), equally owned by Nestlé and the Mahagitsiri family.
However, the joint venture agreement ended on Dec 31, 2024 and the shareholders have been unable to agree on the future direction of QCP.
A court injunction now prevents Nestlé from manufacturing, outsourcing production, distributing, or importing instant coffee products using the Nescafé trademark in Thailand.
Milin Veraratanaroj, chairman of Tang Ngee Soon Super Store Co, said last year the store was contacted by Nestlé about its decision to halt its contract with the Mahagitsiri family.
He said Nestlé must still cater to the Thai coffee market, likely resulting 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, describing the impact we face from not being able to sell Nescafé products,” he said, adding that he expected this letter to be used to appeal the court’s injunction order.
Under normal conditions, Nescafé products are delivered to stores nationwide on a monthly basis, he said.
Some wholesalers have received stock shipments for April, but if the injunction persists, certain stores might not get new supplies and may start seeking Nescafé from other sources, he said.
Some retailers may now begin to stockpile the products, he added.
He noted that the severity of the Nescafé shortage in Thailand depends on the duration of the temporary injunction.
He anticipated that if the order is lifted soon, allowing Nestlé to resume normal distribution, the supply shortage may be minimal.
However, if the court rules against Nestlé and the injunction remains in effect, a prolonged shortage could occur since Nescafé holds a significant share of Thailand’s coffee market.
In the worst case scenario, in which the injunction drags on for months, other brands might attempt to seize the opportunity.
However, they likely lack the capacity to meet all the demand, as expanding production capacity is time-consuming.
If the injunction lasts for four months, it could cause chaos in the Thai coffee industry, with alternative brands struggling to serve the demand.
