The bottle cap snafu that nearly cost Pepsi $32 billion
On the evening of May 25, 1992, a reported 70 per cent of the Philippines population gathered around their television sets.
It was a big night, because the winning number in a huge Pepsi contest was going to be revealed on the Channel 2 news program in Manilla. The contest had been running for four months.
Under the caps of specially-marked bottles of Pepsi were three-digit numbers. Every night, the TV station would reveal that day's winning number in Pepsi's "Number Fever" promotion. Most daily prizes were small - just 100 pesos - the equivalent of about $5. But that night, on May 25, the Grand Prize-winning bottle cap number was to be announced. And only two bottle caps in the entire country contained the magic number.
At that time, the Philippines had a struggling economy and there was widespread poverty. The two Grand Prizes were worth one million pesos each - the equivalent of about $40,000. That was a lot of money in 1992. The average monthly salary of a Filipino family then was $100. A win was perceived to be life-changing.
The contest created a frenzy. Kids were searching everywhere for bottle caps, families were squirreling Pepsi caps away in bags, people were rummaging through garbage cans and some even fought in the streets over found bottle caps.
Pepsi's "Number Fever" became a national phenomenon. The contest was so popular, it was extended for five additional weeks. So when the winning bottle cap number was announced that night, it captured the attention of the country.
Then came the big moment. The winning bottle cap in Pepsi's Number Fever was finally revealed. It was number 349.
Shrieks of joy could be heard in one neighbourhood. Then in the next neighbourhood. Then in the next neighbourhood after that. Then entire neighbourhoods lit up. As a matter of fact, shrieks of joy could be heard all over the Philippines. But how could that be? There were only two Grand Prize winners.
But as it turned out, Pepsi had made a slight mistake.
A computer glitch had printed the winning 349 number under 800,000 bottle caps. There were hundreds of thousands of people who believed they were now millionaires. Some even had dozens of 349 bottle caps in their possession.
When they showed up at Pepsi's bottling plants the next day to claim their prizes, they were stopped at the gates and told the company had made an error - and that no prize money would be given out.
Mass outrage and riots erupted. Boycotts and protesting ensued. Pepsi claimed that only two winning bottle caps had a special security code. Winners shouted that none of the promotional materials said anything about a special security code. Pepsi was forced to put up a barbed-wire fence around their buildings. Homemade bombs were heaved at their bottling plants.
The entire Number Fever promotion was intended to be a fun way to increase Pepsi's revenues. And it did - market share jumped from 19 per cent to over 24 per cent. Sales increased a reported 40 per cent during the contest. Bottling plants ran 20 hours a day, doubling their usual production. Total cost of the promotion was to be a manageable $2 million.
But now Pepsi executives were fearing for their lives.
Furthermore, honouring 800,000 bottle caps with "349" printed on them would cost Pepsi $32 billion. To put that in some perspective, the entire Gross Domestic Product of the Philippines that year was $52 billion.
With that, the nervous Pepsi brass convened for an emergency meeting at 3 a.m. They couldn't possibly pay out $32 billion. So it was decided that, as a "goodwill gesture," they would offer $20 to anyone holding a "349" bottle cap.
Some accepted the $20, which cost Pepsi about $10 million. But others did not.
They felt Pepsi was a massive multinational corporation that should make good on their mistake. Pepsi refused. The rioting intensified. Over 35 Pepsi trucks were overturned and burned. Molotov cocktails continued to be tossed through the windows of Pepsi offices. Pepsi executives hired bodyguards. One said they were, "Eating death threats for breakfast." At one point, grenades were thrown - five people died and many more were injured.
Thousands of legal actions were launched against Pepsi - including a $400 million class action suit. The Philippine Department of Trade stepped in and fined Pepsi 150,000 pesos, and the government tightened up its regulations for contests.
To be "349ed" became slang for being duped.
But as days and months passed, the anger started to subside and the protests stopped, but the lawsuits dragged along. By the end of 1994, 689 civil suits and 5,200 criminal complaints had been thrown out of court. Some cases still lingered through to the year 2006, where a Philippines Supreme Court ruling found that Pepsi hadn't been negligent and wasn't liable for damages due to the error.
With that, the temperature of Pepsi's Number Fever finally came back down to normal. Thirteen long years later.
It's amazing what can be wrought from a simple, tiny bottle cap.