Marketing Disaster : Pepsi-Cola’s “Number Fever” Fiasco, Feb – May 1992

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In a bid to revive their fortunes in South East Asia where Coca-Cola were outselling them by a huge distance (75% to 17% market share), Pepsi-Cola Philippine Inc.’s top brass put their heads together and came up with an ingenious marketing plan called the “The Number Fever”.

The plan was simple: the underside of the bottle caps of some of their best selling drinks – Pepsi, Mountain Dew and 7 Up – would have a 3-digit number and a cash prize amount ranging from 1000 pesos to 1 million pesos imprinted on them. The grand prize of one million pesos was to be given to one lucky winner who had the winning number, announced at the end of the promotion. 

Pepsi Fiasco (1)

The campaign cleverly combined the universal attraction for instant wealth with the locals’ fondness for gambling in all its forms. 

Needless to say, it went viral like hell. Pepsi’s sales shot up nearly 40 percent over the next couple of weeks. Impressed with the initial success, the Pepsi folks even increased the number of prizes to 1500 and made sure the campaign reached to customers all across the country. By the time it was over, an estimated 31 million people had participated in it which was more than half of Philippines’ population at that time. 

It was a huge success alright, but.. it was not all over yet, they had to announce a winner. And they did but when they did, this is what happened..

Pepsi Fiasco (2)

Oops..

Why? What could have caused such madness, you ask?

Well, this is what happened..

Although all caps were imprinted with cash prize amounts, buyers wouldn’t know if they had won until the three digit number was announced. This is where things started to get little dicey. After two months of promotional activities, Pepsi finally announced the number “349” as the winner and that whoever had the winning cap would take home the promised sum of one million pesos. But they missed a key point here. According to their original plans, they were not supposed to consider certain numbers and “349” was one of them. Why? Because they had printed as many as 800,000 caps with the number “349” alone! 

Pepsi found itself in deep shit now. 

Tens of thousands of Filipinos came to their office claiming the prizes, and Pepsi tried their best covering up, saying the caps did not contain proper security codes and all that. They also told them that a computer glitch picked the number by mistake. Gravely disappointed, the crowd went berserk and set the streets of Manila on fire. Nearly 40 company trucks were burned in the attacks, including a grenade blast that killed three people in Davao City. Rioters threw bombs and Molotov cocktails at the bottling plants and even forced many of their executives to flee the country.

PepsiCo’s management couldn’t do much either. Technically speaking they owed around 800,000 * 1 million = 800 billion pesos to the ‘winners’. In comparison, their 2012 income itself was around 240 billion pesos only!

So this is what ensued..

Pepsi Fiasco (3)

Pepsi faced more than 1,000 criminal and civil law suits. It was made to shell out around $10 million in restitution and legal fees alone, which surpassed its initial budget by well over 500%. Add to it, the company paid up to 250 million pesos to nearly 500,000 non-winning claimants as a good-will gesture.

It is widely believed the goof-up was caused by D.G.Consultores, a Mexican consulting firm that Pepsi had hired to randomly preselect the winning numbers and give a list of the 60 winning combination with their corresponding security codes. Pepsi had clearly instructed them not to consider certain numbers and number “349” was of course one of them. The consultants somehow missed the memo, and well.. that spelled doom for their client and its top management.

However, in 2006, the Supreme Court of the Philippines cleared Pepsi of all criminal charges saying it found “no proof of negligence” by the company and said they should not be held liable for the riots. But for them, one can be sure enough damage had already been done.