Bangkok: Analysts are forecasting a shift in Thailand’s substantial coffee market, valued at 60 billion baht annually, due to production issues faced by Nescafe. The Department of Internal Trade has assured that despite these challenges, there will be no product shortages. Both consumers and coffee shops have started sourcing coffee from a variety of brands that meet quality and standard requirements.
According to Thai News Agency, Finansia Syrus Securities Public Company Limited (FSSIA) has highlighted the Min Buri Civil Court’s ban on Nestle from producing, hiring to produce, distributing, and importing Nescafe brand instant coffee in Thailand. This development is seen as a potential opportunity for competitors such as CBG, SAPPE, and TACC. However, the positive impact on these companies remains limited due to their relatively small income proportion from coffee. The situation arose after a dispute with QCP, Nescafe’s joint venture partner, which culminated in the termination of their agreement on December 31, 2024. Nescafe holds a dominant position in Thailand’s instant coffee market, which is segmented into home coffee and away-from-home coffee, valued at 33 billion baht and 27 billion baht respectively.
Nescafe leads the 3-in-1 coffee segment, which constitutes 49% of the home coffee market, holding over 50% market share. In the ready-to-drink canned coffee segment, valued at approximately 14 billion baht, Birdy leads with a 52% market share, followed by Nescafe with 37%, and CBG with about 2-3%. Nescafe also competes in the instant coffee powder segment and health coffee market. Despite the potential benefits for competitors, FSSIA notes that the overall financial impact may be minimal as coffee represents a small portion of their income. Nestle is actively working to resolve the legal situation and aims to resume operations promptly.
Nescafe’s production in Thailand has been ongoing since 1990 through a joint venture with QCP, managed by the Mahagitsiri family. Although Nestl© held managerial and operational control, disagreements regarding future operations led to a legal stalemate. Nestl© sought to terminate QCP’s production rights, while QCP responded with civil lawsuits against Nestl© and its directors.
Nestl© (Thailand) Co., Ltd. recently announced that the Min Buri Civil Court had issued a temporary injunction against them, halting all activities related to Nescafe instant coffee in Thailand, following lawsuits filed by QCP shareholders. Retailers have been notified that orders for Nescafe products will be suspended until further notice, although existing stock can be sold.
The company expressed concerns about the impact on small coffee entrepreneurs and related industries, as the absence of Nescafe products could affect their daily income and operations. Nestl© purchases a significant portion of Thailand’s Robusta coffee beans, and the production halt may affect local farmers. Nestl© is committed to resolving the situation and is appealing to revoke the court’s interim injunction.
Mr. Witthayakorn Maneenet, Director-General of the Department of Internal Trade, confirmed that the department is closely monitoring coffee sales. Despite Nescafe’s production issues, there are sufficient coffee supplies in the market at stable prices. The department has engaged with wholesalers and retailers to ensure stock availability and prevent price hikes. Consumers are increasingly exploring alternative coffee brands, which are competitively priced and of good quality.