At 6 p.m. on May 25, 1992, nearly 70% of Filipinos watched the evening news, waiting for the announcement of a three-digit number. Pepsi was about to announce the winning number in a promotion that had gripped the Philippines’ 65 million people. For weeks, Filipinos had been buying up bottles of Pepsi cola, hoping that one of their three-digit numbers printed on the underside of the caps would match one of the winning numbers locked inside a vault.
Numbers could be redeemed for prizes, which ranged from 100 pesos (about $4) to 1 million pesos for a grand prize (roughly US$40,000 in 1992), which was the equivalent of 611 times the average monthly salary in the Philippines at the time. Pepsi Number Fever was initially wildly successful, and increased Pepsi's monthly sales from $10 million to $14 million and its market share from 19.4% to 24.9%. Winning numbers were announced on television nightly. By early May, 51,000 prizes had been redeemed, including 17 grand prizes. The promotion was proving to be so popular, Pepsi decided to extend the contest an additional five weeks.
When Pepsi announced the winning number of 349 on May 25, Marily So's husband, Isagani, rifled through their crowns (as bottles caps are called in the Philippines) and found a winner: 349-- a million pesos. Their prayers had been answered. The couple danced and laughed until the TV started to rattle and a passing freight train drowned out their shrieks of joy. Five miles across town, Ernesto de Guzmán de Lina, a tricycle-taxi driver, was dashing downstairs to tell his nephew Simon Marcelo that his 349 crown had just won him 50,000 pesos. Marcelo was already celebrating—he had a 349 worth 100,000 pesos, enough to quit his job as a cocktail waiter in the city’s red-light district. Similar scenes were playing out across the country. A bus driver had three 1 million-peso 349s. A mother of 12 whose children went through 10 bottles of Pepsi a day had won 35 million pesos.
But there was a problem-- a big one for Pepsi.
Before the contest was extended to add new winning numbers, 800,000 regular bottle caps had already been printed with the number 349 (but without the corresponding security code). Theoretically, these bottle caps were cumulatively worth $32 billion. Winners raced to the iron gates of Pepsi’s bottling factory in Quezon City, just northeast of Manila, to claim their prizes. As the crowd grew, a secretary dialed the marketing director, Rosemarie Vera. “There seems to be many 349 crowns in circulation among people I know,” the secretary said, according to an account in the Philippine Daily Inquirer. A manager tried to escape the factory, but protesters threw stones at him. A bomb threat would follow hours later. At 10 p.m., someone from the company telephoned the Philippine Department of Trade and Industry and said a mistake had been made.Pepsi initially responded that the erroneously printed bottle caps did not have the confirmation security code, and therefore could not be redeemed. The next morning, newspapers announced that the winning number was in fact 134, adding to the confusion. After an emergency meeting of Pepsi executives, the company offered 500 pesos ($18) to holders of mistakenly printed bottle caps, as a "gesture of good will". This offer would be accepted by 486,170 people, at a cost of $8.9 million. Executives began traveling with bodyguards, and the company moved American employees out of the country.
As the weeks turned into months, many irate 349 bottle cap holders who refused to accept PCPPI's settlement offer formed a number of a consumer groups, which organized boycotts of Pepsi products, and held rallies outside the local Pepsi offices and the Philippine government. Most protests were peaceful, but on February 13, 1993; a schoolteacher and a 5-year-old child were killed in Manila by a homemade bomb thrown at a Pepsi truck. In May of that year, three Pepsi employees in Davao were killed by a grenade thrown into a warehouse. Pepsi executives received death threats, and as many as 37 company trucks were damaged by being pushed over, stoned or burned. One of the three men accused by the Filipino National Bureau of Investigation of orchestrating the bombings claimed they had been paid by Pepsi to stage the attacks, in order to frame the protesters as terrorists.
It was perhaps the deadliest marketing disaster in history—and remains one of the business world’s great cautionary tales. “I don’t think that, from the onset, people would look at this and say people could actually die,” says Lee Ostrom, a University of Idaho professor and the co-author of a risk management textbook that included Number Fever as a case study. The scandal added to what was already a bad year for Pepsi. In the U.S., dozens of people were claiming they’d found syringes inside its cans, a “tampering” crisis the FBI would later expose as a hoax. Crystal Pepsi, a colorless version of the soda, was selling miserably, soon to become one of history’s great product failures. And a world tour by longtime spokesman Michael Jackson was about to be derailed by accusations of child molestation, with Jackson canceling dates and saying that he’d become addicted to painkillers first prescribed after his hair caught fire during a 1984 Pepsi commercial shoot.
Why had the contest sparked such widespread anger? The scandal tapped into rising anti-colonial sentiment in the Philippines, which was then flaring over the American military presence. Following fraught, failed negotiations, the U.S. was withdrawing from the last of its six bases. The closures were a victory for nationalists, but they came at the cost of hundreds of millions of dollars in yearly aid and tens of thousands of jobs.
Number Fever also became linked in the public imagination with the country’s chaotic national elections, which had taken place a few weeks earlier but were still unresolved thanks to counting delays and procedural and legal challenges. The presidential contest, in particular, had had colonial overtones, pitting Fidel Ramos, a cigar-chomping, right-leaning West Point graduate with Pentagon connections, against Miriam Defensor Santiago, a U.S.-educated lawyer who’d worked overseas for the United Nations, and Eduardo Cojuangco Jr., chairman of San Miguel Corp., a Coca-Cola partner. Other candidates included Imelda Marcos, widow of Ferdinand. “One must wonder how many voters were drawn from the voting booth to Pepsi protests,” a columnist wrote. In the end, Ramos narrowly defeated Santiago, a result marred by evidence of fraud.
About 22,000 people took legal action against PepsiCo; at least 689
civil suits and 5,200 criminal complaints for fraud and deception were
filed. In January 1993, Pepsi paid fine of 150,000 pesos to the Department of
Trade and Industry for violating the approved conditions of the
promotion. On June 24, 1996, a trial court awarded the plaintiffs in one of the lawsuits 10,000 pesos (about $380) each in "moral damages". Three dissatisfied plaintiffs appealed, and on July 3, 2001, the
appellate court awarded these three plaintiffs 30,000 pesos (about $570) each, as well as attorneys' fees. Pepsi appealed against this decision. The suit would reach the Supreme
Court, which in 2006 ruled that Pepsi "is not liable to pay the amounts
printed on the crowns to their holders. Nor is [Pepsi] liable for damages
thereon", and that "the issues surrounding the 349 incident have been laid to rest and must no longer be disturbed in this decision."
No comments:
Post a Comment