How wrong can a marketing campaign go?
You might remember this commercial from Pepsi that featured Kendal Jenner solving the systemic issues behind the Black Lives Matter movement by giving out cans of Pepsi soda to law enforcement before returning to her group of fellow protestors. The ad, which was released in 2017, was immediately met with backlash over concerns that its feel-good message of unity oversimplified the reasons for the movement’s existence.
It’s not hard to see why given that Kendal celebrates with her protestor friends as if handing a can of soda to a police officer solved racism.
But if you thought the Twitter shitstorm that came in the wake of that commercial was bad, you haven’t truly seen Pepsi’s marketing department mess up big time.
The Pepsi Number Fever Contest
“I remember this one! Your uncles, aunts, and I would check under every Pepsi bottlecap in case we found the winning number.” My mother told me. She was in her 20s when Pepsi launched their Pepsi Number Fever contest.
The year is 1992 and our stage is set in the sunny tropical paradise of the Philippines. The island nation’s economy is at one of its weakest points following several droughts, a killer earthquake, destabilization efforts by several political extremist groups, and a typhoon that destroyed Cebu, one of the countries urban hubs, second only to the capital of Manila.
In short: a slew of economic troubles.
Pepsico had its own economic problem in the Philippines: the soda market was dominated by Coca-Cola.
Pepsi and Coca-Cola have had something of a blood feud between them since the 1980s as the two beverage giants vied to be the entire world’s soda of choice. Coca-Cola would go as far as sending a Coca-Cola can to space onboard the Space Shuttle Challenger in 1985.
On the other hand, Pepsi became obsessed with proving themselves against Coca-Cola with marketing campaigns that encouraged comparison between the two soda brands, particularly the “Pepsi Challenge.”
It was a hit and Pepsi tried to keep their momentum by follow it up with a contest that capitalized on the country’s high population, lower value currency, and relative poverty.
Picture this: A commercial comes on TV that shows a nurse barging into an operating room to ask the presiding doctor if he has the “number fever”. You can imagine how badly this would have been received in 2021 but this was in the Before Times. The nurse then explains how the game works.
The Pepsi Number Fever is similar to a lottery. Aspiring winners needed to look for winning numbers under the bottlecaps of Pepsico beverages. Possible sources for winning bottlecaps were the brands 7-Up, Mirinda, Mountain Dew, and Pepsi itself. The contest promised a number of prizes, but the most coveted of these was the million peso jackpot.
There’s something morbidly funny about watching the doctor and other hospital staff rush out of the operating room in a frenzy when you realize that that’s exactly what happened when Pepsi printed 800,000 “winning” bottlecaps.
But before we move on to the riots, deaths, and lawsuits that ensued, let’s take a moment to consider: “How much is one million Philippine pesos?”
At the time this article was written, 1 million Philippine pesos is equivalent to $20,034 U.S dollars. It is a nice chunk of cash. But, if you ask me, it isn’t enough money to riot and kill people over.
That being said, remember that inflation affects how much money is truly worth. The $20,000 USD jackpot would have had more purchasing power back in 1992. Add to that the fact that the cost of living in the Philippines is lower when compared to the U.S, though not when compared to local wages, and the massive economic disparity between the country’s socioeconomic groups and you start to see why so many people were furious when Pepsi backed out of giving all the “winners” their 1 million peso prize.
1 million pesos would have been a life-changing amount of money for a lot of people. It’s nowhere near enough for a house in the suburbs outside Manila today, but in 1992, it was the opportunity of a lifetime for people like Marily So.
She was one of the millions of Filipinos tuned in to Channel 2 evening news when Pepsi announced their winning bottle cap number. According to Bloomberg Businessweek, the then 23-year-old was living in a shack near a railroad with her four children at the time.
65 million people held their breath as they waited to see who among them would be lifted out of abject poverty. Then, the big reveal.
So and her husband combed through their collection of bottle caps and found that they were the lucky ones.
But so were 600,000 other people.
Pepsigate: The Riots That Followed
Why would Pepsi promise to pay 1 million pesos to 600,000 people, an amount that comes out to 600 billion Philippine pesos or a whopping $12 billion U.S dollars?
The answer is: they didn’t.
“It all started as a ‘mistake’ of Pepsi-Cola,” he writes. When Pepsi realized its very expensive mistake, it withdrew the announcement and had it replaced with “134.” But people tuned in closely to the May 25 broadcast and they all heard “349.”
Two days after the broadcast, thousands of people from all over the Philippines stormed the iron gates of the Pepsi-Cola factory located in Quezon City, Manila. This was serious. If Pepsi withdrew the winning bottle cap number, it meant millions of dreams of a better life would be shattered.
Hordes of people flooded into the streets of Quezon, coming from as far away as Davao, the southernmost major city of the country.
By noon, there were lynch mobs outside the Pepsi factory, waiting for a Pepsi executive they could hold accountable for the deception.
On Pepsi’s side, the incident wasn’t a deception but an honest mistake. They explicitly told their vendor factories to not print the winning number, of which only two were to be made, as Pepsi would directly manufacture and ship them to the Philippines themselves.
But the local Pepsi executives realized that if they waited for orders from their U.S headquarters, the Quezon-based factory was going to burn and they may have a few badly injured employees on their hands if they didn’t try to placate the crowd.
Pepsi asked the angry mob to accept $18 U.S dollars each as an apology from the company for what it explained was a printing error. Pepsi didn’t intend to print 800,000 winning bottle caps, after all.
That didn’t stop people from thinking Pepsi was guilty of misrepresentation. They argued that the winning 3-digit number could mean “anything from years ago to the minute before the winning number is announced.” Participants in the Pepsi Number Fever contest had reason to believe they had a fair and equal chance to win.
The intended winning bottle caps were printed with code numbers “L-2560-FQ” and “L-3560-LQ.” It was reasonable to expect that if your 349 bottle cap had either, then you had a legitimate claim to the prize.
This is when the lawsuits started to pour in.
Wealthier 349 winners began to call their lawyers who advised them to reject the measly 500 peso consolation prize and encouraged the participants to sue Pepsico into oblivion.
While Pepsi scrambled to deal with the slew of civil and criminal lawsuits being filed against it, it also had to contend with violent customer riots that led to targeted attacks on their factories and employees, leaving five people dead within the year.
Thousands of Winners, Hundreds of Lawsuits
Of the hundreds of lawsuits that were filed against Pepsico by disgruntled customers, Henares Jr. identified six people who claimed to have won the million peso prize.
- Sgt. Socrates Jimenez of the Army Operation Center in Fort Bonifacio.
- Juliet Pineda, a resident of Valenzuela City.
- Jose R. de la Cruz, a resident of Fairview, Quezon City.
- Lilia Ramos, who came all the way from Davao City; and
- Joseph Ilagan, another local Quezon City resident.
Lawyers began preparing a class action suit against Pepsico for 7 billion pesos plus damages in what would have been the most expensive lawsuit in Philippine history.
But as it stands, Pepsi couldn’t just pay billions in prizes.
Henares, given his position, was in the same circle as Luis “Moro” Lorenzo, the local franchise holder of Pepsi Cola Products Phil. Inc. (PCPPI). He’s a family friend of the Henareses and Henares Jr. claims to have spoken with close relatives and friends of the magnate who gave him the inside scoop.
- Pepsi paid 126 million pesos in apology prizes to holders of the 349 bottlecaps as of June 3, 1992.
- Around 100,000 people claimed to have won the 1 million peso prize, a total of 100 billion pesos.
- If all 349 bottle caps were to be honored, it would cost Pepsico roughly 700 billion pesos – more than twice the national budget of the Philippines at the time. At $27 billion dollars, it would have been about as large as the Philippines’ foreign debt.
The worst part? Pepsico was the one behind the Number Fever contest, but it was Pepsi Cola Philippines, the franchise, that had to do damage control and pay for the 126 million pesos of apologies to angry customers.
Of the hundreds of lawsuits that were filed against Pepsi, I was able to track down four that reached the Supreme Court of the Philippines:
- Pepsi Cola Products (Phils.), Inc., v. Efren Espiritu et al. (G.R. No. 150394).
- Pepsi Cola Products (Phils.) and Pepsico, Inc. v. Pepe B. Pagdanganan and Pepito A. Lumajan. (G.R. No. 167866).
- Pepsico, Inc. v. Jaime Lacanilao consolidated with Pepsi Cola Products Phils., Inc. v. Court of Appeals and Jaime Lacanilao (G.R No. 146007 and 146295)
- Paul G. Roberts, et al. v. Court of Appeals, et al. (G.R. No. 113930).
So of course I had to read all of them.
Pepsi won in the first case. The Court found that the 349 bottle caps that the petitioners had didn’t have any of the eight security codes that corresponded to winning 349 bottle caps. The case cites three more Pepsi 349 fiasco-related lawsuits not listed above as a basis for ruling in favor of Pepsi.
The second case suffered from the same problem, leading to Pepsi winning it as well. The same happened with the third case. You might think that the fourth listed case is the one where Pepsi loses, but no. The petitioners are actually Pepsi execs themselves, suing the Court of Appeals justice for hastily issuing arrest warrants against them.
It’s true that Pepsi lost a lot of money during the 349 incident, but it seems they came out relatively unscathed when you think about how big of a scandal the bottle cap printing errors caused.