Nestlé Faces Fierce Challenge from Mahagitsiri Family in Nescafé Dispute
Mahagitsiri family disputes Nestlé's account of terminated partnership, raising allegations of unfair practices
A day after Nestlé released a statement outlining seven key points of contention in its legal dispute with the Mahagitsiri family over their now-dissolved partnership, the Mahagitsiri family has issued a robust rebuttal, accusing the multinational food and drink giant of misrepresenting the facts.
The Mahagitsiri family insists that Nestlé's public pronouncements are "misleading information" and has moved to set the record straight on each disputed point.
In a strongly worded statement released on Thursday, the family asserted, "We used to talk about 'gray Chinese' influence, but what is even more dangerous is the 'G_ay Swiss foreigner' replacing them—deeply entrenched and powerful."
The escalating conflict follows Krungthep Turakij News's publication on April 16, 2025, of Nestlé's seven-point summary of the Nescafé disagreement, a consequence of the ongoing legal wrangle between Nestlé and the Mahagitsiri family.
Key Points of Contention
- The Nature of the Partnership
Nestlé had described its relationship with the Mahagitsiri family as a joint venture, with Nestlé owning the Nescafé brand and partnering with Prayudh Mahagitsiri to establish Quality Coffee Products Co., Ltd. (QCP) for Nescafé production in Thailand.
Nestlé claimed to hold 50% of QCP’s shares, with the Mahagitsiri family owning the other half, while Nestlé managed production, distribution, and marketing.
The Mahagitsiri family counters that while Nestlé owns the coffee formula and production technology, QCP has paid Nestlé "tens of billions of baht" over the years for these rights.
They further argue that Nestlé's decision not to renew the contract upon its expiry and the International Arbitration Court's December 2024 ruling, which they say unilaterally terminated the joint venture with Prayudh Mahagitsiri, is legally flawed under Thai law.
They emphasise that Prayudh holds only a 3% stake in QCP, compared to Chalermchai Mahagitsiri's 47%, and therefore, the termination does not legally bind QCP.
The family deems Nestlé’s focus on Prayudh Mahagitsiri as a "deliberate distortion of facts."
- Legal Proceedings
To protect their interests, Chalermchai Mahagitsiri and his family initiated legal action in the Minburi Civil Court, securing an injunction that, as of April 3, 2025, prohibited Nestlé from producing, selling, or importing Nescafé products in Thailand. This move was intended to safeguard the Thai coffee industry from foreign competition.
- Nestlé's Response to the Injunction
The Mahagitsiri family accuses Nestlé of disregarding the Thai court's ruling by pursuing legal action in the Central Intellectual Property and International Trade Court.
They allege that Nestlé misrepresented this court's ruling on April 11, 2025, falsely claiming it permitted them to resume normal Nescafé operations.
- Nestlé's Future Strategy
The Mahagitsiri family believes that Nestlé's legal manoeuvres are aimed at "maximising its profits in Thailand" by importing foreign coffee and ensuring that 100% of the profits benefit Nestlé.
- Comparison to Previous Disputes
Nestlé has argued that this case differs from previous contract terminations in Thailand, asserting its sole ownership of the Nescafé brand and portraying QCP as merely a manufacturer.
However, the Mahagitsiri family contends that QCP’s funds were instrumental in developing the production infrastructure, thus giving the company a legitimate stake in the business.
- Nestlé's Factory Plans
While Nestlé has stated its intention to continue producing Nescafé in Thailand, it has not provided details about any new factory developments.
The Mahagitsiri family interprets this as a strategic ploy by Nestlé to consolidate its control over all profits.
- Temporary Sales Suspension
Nestlé attributed the temporary suspension of Nescafé sales to the Minburi Civil Court’s injunction.
The Mahagitsiri family retorts that Nestlé has shown a disregard for the impact of the court ruling on small businesses, Thai farmers, suppliers, and the wider coffee industry.
- Allegations of Industry Destruction
The most serious allegation levelled by the Mahagitsiri family is that Nestlé is deliberately attempting to destroy the Thai coffee industry, which the family has cultivated for over 50 years.
They claim that despite holding a 50% stake in QCP, Nestlé’s ultimate goal is to eliminate QCP and replace Thai production with imported coffee, thereby securing 100% of the profits for itself.
The family denounces these actions as "unethical, exploitative, and unjust."
- The Future of QCP
Nestlé terminated its contract with QCP on December 31, 2024, citing the International Arbitration Court’s ruling. This has resulted in QCP’s inability to produce Nescafé.
The Mahagitsiri family argues that this ruling was misrepresented and that Nestlé is attempting to force QCP into bankruptcy, despite the company possessing substantial assets (over 10 billion baht) and significant cash reserves (over 5 billion baht).
They propose that QCP should be allowed to continue producing coffee, either under the Nescafé brand or its own label, to offer consumers more affordable options.
This escalating dispute highlights the complex dynamics of international business partnerships and the fierce competition within the global coffee market.
The legal battle between Nestlé and the Mahagitsiri family will undoubtedly have significant implications for the future of Nescafé production and distribution in Thailand.
