Rage, Riots, and Death: Looking Back at the Pepsi 349 Debacle
Mention the numbers 349 to anyone who was alive or came of age in the early 1990s and, chances are, they instantly know what you’re talking about. Probably the worst marketing disaster for a private company in the country’s history happened 30 years ago this year, and all because of those three numbers. The Pepsi 349 incident of 1992 is still talked about to this day, especially by those who had the (mis)fortune of owning the bottlecaps with those numbers emblazoned underneath.
The Pepsi 349 saga begins in 1984, when beverage behemoth PepsiCo Inc. introduced a promotional campaign in order to increase market share against its bitter rival, Coca-Cola. At the time, Coke was miles ahead of Pepsi in the so-called softdrink wars, after the latter dominated the local market in the late 1970s. Pepsi needed to push back and gain some ground. Christopher Sinclair, who was then PepsiCo’s CEO at only 38 years old, decided on an exciting new marketing campaign to get more people excited about buying Pepsi: Number Fever, which was developed by a New York-based promotions executive named Pedro Vergara.
After a generally successful rollout in the U.S., Number Fever was expanded to a few Latin American countries, which was home to some of the world’s largest softdrink consumers—Argentina, Chile, Guatemala, and Mexico.
Years later, on January 15, 1992, Pepsi Cola Products (Philippines), Inc., or PCPPI, the local franchise holder of PepsiCo Inc., formally applied for a permit with the Department of Trade and Industry to conduct the nationwide Number Fever campaign in the Philippines. The promo was simple: buyers of Pepsi Cola products—Pepsi, 7-Up, Mirinda, and Mountain Dew—could take home the amount printed underneath the bottle caps or crowns if the corresponding three-digit number matches the one Pepsi announces as the winner for that day. Amounts ranged from as little as P100 to as much as P1 million.
It was like the mini version of the lottery, but with slightly better odds of winning: 28.8 million to one, according to published ads during that time.
The DTI approved PCPPI’s application on January 23, and Number Fever commenced soon after. A Mexican consultancy firm called DG Consultores randomly preselected the winning numbers along with their corresponding security codes, which was then sent to PCPPI.
According to a Supreme Court decision on the case, to ensure that the list of winning numbers would not be tampered with, it was kept inside a safety deposit box inside the UCPB branch in Legaspi Village, Makati. The security box could only be opened using two keys, each held by a representative of the DTI and PCPPI.
The DTI then supervised the production of the winning crowns and their subsequent release into the market.
Watch this video from Bloomberg
An instant success
Almost immediately after the campaign started in February 1992, it proved to be an instant hit. People began buying Pepsi products, keeping the caps and crowns, and then waiting for the nightly announcement of winners on ABS-CBN’s TV Patrol newscast. By the time the regular run of the promo ended on May 8, some 51,000 people had won the minimum prize of P100, while 17 lucky buyers each took home the big prize of P1 million. Various news reports said Pepsi’s monthly sales increased from $10 million to $14 million and its market share rose from 19.4 percent to 24.9 percent for the duration of the promotion. The company even claimed that nearly half of the country’s 65 million population at the time was aware and had participated in the campaign. It was enough for Pepsi’s chief rival Coke, through its local president Jesus Celdran, to say that he was “concerned.”
Winners were able to claim their cash prizes at designated Pepsi redeeming stations after the company verified that the caps or crowns were legitimate and had not been tampered with.
Because of the success of Number Fever, PCPPI applied for an extension of the promo for five more weeks. A second list of randomly preselected winning numbers was kept in a safety deposit box of UCPB Aguirre branch, and just like before, two keys held by different people from PCPPI and DTI were needed to open it.
The nightmare begins
On the evening of May 25, 1992, it was announced that 349 was the winning number. Ordinarily, only a few buyers would turn up to collect their prize. But this time, tens of thousands of people came forward holding in their hands a cap or crown with the number 349. In all, Pepsi had reportedly manufactured from 600,000 to as many as 800,000 caps and crowns bearing the winning number.
For the company, clearly there had been a mistake. If it went ahead and paid all of the people who had the winning number, Pepsi reportedly would have had to shell out as much as $32 billion, which was simply unjustifiable. And so, after an emergency meeting at 3 a.m., PCPPI executives said there had been a computer error concerning the printing of the winning numbers. A Bloomberg report said the company initially tried to change the winning number to 134, which was the number that newspapers reported the next day.
However, on May 28, after a careful review of the process, PCPPI announced that 349 was the winning number, but only those crowns with the matching security codes would be honored. The company published a list of the cash prizes worth P100 to P50,000 with the specific security codes and said that it would not be disbursing the cash prizes to the 349 claimants whose codes did not match those in the official list. Instead, Pepsi said it would offer them P500 as a gesture of goodwill. Based on its calculations, Pepsi would limit costs to around $6 million if about half of the claimants accepted the P500 offer, which was at least manageable compared to the billions it would have otherwise had to shell out.
Many of the claimants did say yes to the goodwill offer—a total of 486,170 in fact—and according to records, Pepsi coughed up over P240 million to all of them.
However, there were still a whole lot of people demanding to get the full amount in their crowns. Riots erupted outside the Pepsi factory gates in Quezon City; angry claimants threw rocks and homemade explosives at corporate headquarters; and delivery trucks were vandalized, overturned, and even burned. In a tragic incident, a homemade grenade bounced off a truck and exploded near a schoolteacher named Aniceta Rosario and a five-year-old girl. The blast killed them both and injured several others. The violence lasted for months.
Taking it to the courts
It didn’t take long before the Pepsi 349 claimants started to organize themselves into groups that had names like United 349 and Solid 349. One of the most prominent, however, was called Coalition 349 and was led by a man named Vicente Del Fierro Jr., who had initially scoffed at the promotional campaign and called it a “a social disease that nurtures the gambling instinct in our children.” But after his daughter said she held one of the 349 crowns, he became an advocate for the movement to make Pepsi pay.
As many as 22,000 people filed around 687 civil suits and over 5,200 criminal complaints against Pepsi to do just that. Del Fierro even hired an American lawyer and filed a case against the company in New York. However, the court dismissed the suit and said it should be heard in the Philippines.
In one of those suits, a group called Ugnayan 349 filed a demand letter to Pepsi with the Quezon City RTC in November 1992. Four years later, in 1996, the RTC rendered a judgment that said the plaintiffs “were not entitled to their crowns” but ordered PCPPI to pay each of them P10,000 as moral damages. Both Pepsi and the plaintiffs filed appeals and took it all the way to the Supreme Court, which, in 2007, rendered a verdict that referenced similar other cases filed across the country, all of which, by then, had already been settled.
“In the instant case, not only are the legal rights and relations of the parties substantially the same as those passed upon in the other Pepsi 349 cases, but the facts, the applicable laws, the causes of action and the issues are identical such that a ruling in one case is a bar to any attempt to re-litigate the same issue,” the SC decision read. “Final and executory rulings have settled that 349 crowns bearing the wrong security code are not winning crowns. Hence, petitioner PCPPI is not liable to pay the amounts printed on the crowns to their holders. Nor is PCPPI liable for damages thereon.”
There are many other aspects to the story of the Pepsi 349 incident: how the Pepsi CEO flew to Manila to personally meet with then-Philippines President Fidel V. Ramos, how protesters stormed Malacañang during a visit of then-U.S. President Bill Clinton, and how the DTI has since tightened rules on companies’ marketing and promotional campaigns. The actual cases involving the Pepsi 349 incident may have since been resolved and have slowly dissipated into the mists of history, but for those who lived through it, especially the thousands who fought for the right to be heard and acknowledged, the story lives on.