The Pepsi Bottle Cap Competition That Led To Rioting, Lawsuits and Deaths
The Pepsi Cola War
For as long as they have both been around, Pepsi and Coca-Cola have had an intense rivalry with each other. It once got so bad that Pepsi felt compelled to alter their financial records, in order to make it seem like they had higher sales numbers than Coke.
It was this rivalry, with Coke dominating 83% of the cola market in 1992, that led Pepsi to come up with more innovative but ultimately disastrous methods to drive sales.
A New Executive
With Pepsi needing to innovate to win out against Coke in the soda wars, executive Pedro Vergara came up with the idea of Number Fever.
Vergara was a Pepsi executive from Chile who was working in the promotions department in New York, and it was his idea to create a competition and prize that would boost Pepsi’s numbers.
The Genius Competition
The idea was simple: put numbers on the inside of every Pepsi bottle cap, and tie one of the numbers to a cash prize (without announcing which right away).
This scheme, which caused people to mass-buy and horde Pepsis, had already been implemented in America to great success. It seemed the logical next step to use the competition to boost sales in Argentina, Chile, Guatemala and Mexico – as well as the Philippines.
The Philippines Expansion
Pepsi hired a Mexican company named DG Consultores to roll out the Number Fever promotion in the Philippines, and it didn’t take long for the competition to influence the buying habits of the locals.
Monthly sales in the areas running the promotion jumped from $10 million to $14 million virtually overnight, and factories tasked with bottling Pepsi had to double their production on short notice.
The Luck of the Draw
Given that there had been an aggressive promotional campaign for the offer, it seemed like almost everyone in the Philippines was listening when it was time for the results to be announced.
Families everywhere were gathered around their TVs when the winning bottlecap number was announced: 349.
Too Many Winners
Those with one or more bottlecaps that featured the number 349 were overjoyed, and quickly rang their neighbours to announce their winnings. Some had earned 50,000 pesos, some had won a million, and one woman even added up her total to 35 million pesos.
What the winners didn’t realise at first is that there were more winning bottle caps than had been intended. While only two caps were supposed to bear the winning number, due to a computer error, hundreds of thousands of caps had been printed with ‘349’. Immediately, frantic calls were made to the New York office.
Not the First Mistake
Pepsi would soon realise that a mistake with the promotion had led to way too many customers having winning numbers – altogether, winnings totalled around $32 billion – and it wasn’t even the first error that had been related to the promotion.
Not only had the wrong winning number been announced in Chile due to a faxing mistake, which led to riots among citizens, but scammers in the Philippines had also been flooding the market with fake winning bottle tops.
As if the flood of winners hadn’t already made the participants in the Philippines suspicious enough already, the press the next day announced a completely different winning number.
Either in order to cover for their mistake, or simply due to another disastrous error, Pepsi’s communication with the press led to the number 134 being reported as the winner instead.
This added confusion caused many of the original 349 winners to believe that they had been conned, which of course led to significant anger.
When the factory locked their doors the next morning, they were met with a crowd of angry winners and protesters, throwing rocks and shouting at the employees for an explanation.
A Goodwill Gesture
Hoping to avert the disaster to come, the relevant Pepsi executives held an all-night meeting as protests raged, eventually deciding at 3 am that a goodwill gesture of 500 pesos would be offered in compensation to each winner who came forward in the following two weeks.
Given that their estimates predicted that there were over 600,000 winning bottle caps in circulation in the Philippines, Pepsi estimated that their damages could run as high as $6 million if every winner took advantage of the deal.
The Error Revealed
As for what had caused the costly mistake in the first place: the number 349 had been designated a non-winner in all other versions of the competition, so an appropriate amount with that number had been printed.
Unfortunately, at some point during the Philippines extension, 349 had been mistakenly chosen as the winner, leading to there being far more in circulation than planned. The Philippines bottle caps had a distinct seven-letter serial code on them, and Pepsi announced that any supposedly winning bottle caps with the serial number were void.
The Avenging Preacher
When the first crowds were gathering in front of the Pepsi factory, one of the major players in what would become a protracted legal battle was not even in attendance. Instead, Vicente del Fierro Jr was jammed into a Dunkin’ Donuts with other protesters across the street, watching the chaos unfold.
The Catholic preacher and advertising consultant had been suspicious of the competition in the first place, but had gotten personally involved after his daughter obtained a so-called winning bottle cap. Del Fierro asked those waiting with him in the doughnut shop to write up a list of all those possessing winning bottle caps, and declared that he would win them justice.
Friends in Unlikely Places
*Credit: Getty via The Indipendent
Del Fierro began rallying support for his legal mission to get the winners their rightful money, and he soon received an offer of help from an unexpected source.
According to del Fierro, Coke’s local CEO instructed one of his employees to offer del Fierro’s campaign 10,000 pesos, with del Fierro asking in response if he could use it to buy a megaphone.
Jumping on the Bandwagon
*Credit: Bloomberg Quint
Even as del Fierro was organising rallies outside of Pepsi factories and offices, and promising to fund a spate of lawsuits aimed at Pepsi, others were also promising the winners of the competition their justice.
Many other groups sprang up, some of whom were actively asking for money for membership, and all of whom claimed that they could get the winners their settlements more efficiently if only they were properly funded.
Putting Out Fires
As weeks passed following the initial announcement, the tone of the protests grew even sourer, with makeshift Molotov cocktails being thrown through the windows of several Pepsi factories.
One morbidly funny consequence of these fires was the Pepsi employees dousing the flames with 7 Up, which was produced in the same factories.
*Credit: R. D. Ward
As if things were not going bad enough for Pepsi already, things got worse when the Filipino government decided that they had no choice but to get involved.
After months of protests, in January 1993, Pepsi was charged 150,000 pesos for deviating from the promotional materials that the Filipino government had explicitly approved, a sum of money which made them even less likely to pay out any additional money to the winners of the bottle cap competition.
A Tragic Escalation
*Credit: Paul Sakuma via Business Insider
The mood surrounding the Pepsi protests had been dark for some time, but when tragedy struck as a direct result of the protests, any hopes of reconciliation between the two sides seemed to dissolve.
In February, Aniceta Rosario was killed when a homemade bomb was thrown at a passing Pepsi truck, which bounced back on impact and instead killed Rosario in the blast. The victim was a school teacher on her way to the grocery store, and the fact that Rosario was not even involved with the protests caused outrage amongst the population.
An Emergency Meeting
The seriousness of the so-called 349 scandal could no longer be ignored, and so Pepsi’s International CEO Cristopher Sinclair flew to Manila to meet with President Ramos.
Pepsi pleaded for help from the Filipino government, on the grounds that the scandal could seriously hurt the Philippines, as no companies would want to invest there. According to the minutes of the meeting though, Ramos was unconvinced.
Making it to New York
Meanwhile, the preacher del Fierro was finally arriving in New York, armed only with a report from the Philippine Senate that concluded that Pepsi was guilty of both misleading advertising and gross negligence.
Del Fierro tried to make good on the promises he had made back home, hiring two American lawyers to sue Pepsi to the tune of $400 million dollars in actual damages, as well as moral damages.
The 349 scandal had grown to such a size that it was easily the biggest problems that Pepsi was facing, but it was not actually their only problem. Even in America, Pepsi was caught up in a whole host of drama that was impacting its bottom line.
Not only were Pepsi embroiled in a hoax that saw dozens of people claim they had found syringes in their soda cans, but the clear version of the drink, Crystal Pepsi, had just been released to a disastrous reception.
To most journalists and commentators following the exploits of Pepsi at the time, it seemed like the situation of the company could not be more dire. However, things got worse when it was revealed that a string of Pepsi factory bombings, allegedly arranged by the 349 campaign, may actually have been orchestrated by Pepsi themselves.
Rodelio Formento, a factory worker in the Philippines, initially confessed to the crime and said that he had been recruited by two other activists at a 349 meeting. However, he later revealed that a Pepsi representative had been present at the meeting, and that the goal was explicitly to cause a rift between the various 349 activist leaders, who would find the use of violence polarising. Formento even said he and the other two bombers had been paid for their work.
Pepsi Bites Back
This new revelation was obviously disastrous for Pepsi, who began losing court cases seemingly left and right, and nine local Pepsi executives in the Philippines were sent arrest warrants by the Philippine Supreme Court.
In retaliation, Pepsi sued the prominent activist del Fierro, on the grounds that he had falsely claimed that he had been illegally detained by Pepsi.
Appealing to the President
Wanting to escalate the consequences for Pepsi even further, hundreds of 349 winners seeking justice rallied outside of Manila’s Malacañang Palace. The goal of the protest was to force President Bill Clinton, who was there on a state visit, to intervene and pay the winners their dues.
Protestors even set off a Pepsi bottle effigy stuffed with fireworks during the demonstration, but Clinton was not swayed to intervene.
An Impossible Market
*Credit: Esquire Philippines
The American lawsuits did not materially change the outcome for the 349 winners, as it was eventually concluded that they should be heard in the Philippines, but it did make Pepsi’s Philippine market completely untenable.
Shortly after the protests began, Coke was already outselling Pepsi three-to-one, and their local cola Cosmos was also outpacing Pepsi in sales, due to locals steadfastly refusing to buy Pepsi.
A Final Verdict
*Credit: The Economist
It took until 2006 for a final verdict to be reached, and it unfortunately wasn’t the one that the 349 activists had been hoping for.
A Philippine court ruled that Pepsi were not liable for damages in any way, and they also hadn’t been negligent. With that said, Pepsi sales in the area never recovered.