How A Simple Mistake By Pepsi Backfired On The Company Big Time

It was 1992 in the Philippines, and times were tough. The country’s economy wasn’t doing well, and almost half of the residents were living in extreme poverty, surviving on the equivalent of $1.25 a day. Though they were working hard, many families needed a financial miracle. So when Pepsi announced its Number Fever promotion, a lottery game operating solely in the Philippines, the grand prize was the salvation many’d hoped for — until disaster came crashing down.

In February, PepsiCo Philippines announced it would be running a promotion based out of Manila, the capital of the country. Under the promotion’s rules, Pepsi would print numbers between 001 and 999 under select sodas’ bottle caps.

At the same time, they ran a nightly blurb on Manila’s Channel 2 News TV station, declaring the day’s winning number. Anyone who had bought a Pepsi product with a number under the cap could check their number against the winning one, and hopefully get big money.

Ezra Acayan/Getty Images

The standard prize was small, about the equivalent of $5 USD, but that was still more than a day’s minimum wage in the country at the time. Even better, the grand prize was one million Philippine pesos — about $40,000 USD. That kind of cash would change a family’s life.

Geric Cruz for Bloomberg Businessweek

Understandably, this glimmer of hope that Pepsi had suddenly provided was a life raft that hundreds of thousands of people latched onto. It was like Willy Wonka’s golden tickets: everyone tried to get a Pepsi bottle cap, and the company’s market share soared from 4% to 25% in just three months.

Bill Frakes/Sports Illustrated/Getty Images

Since winning caps were in such high demand, Pepsi had hired an outside marketing firm to randomly generate a list of numbers, which was securely hidden in a safe deposit box. The list was then fed into a computer system, which printed bottle caps in the packaging facilities.

Archive Photos/Getty Images

For a while, the process worked well. Between February and May, 51,000 lucky Pepsi drinkers had claimed prizes worth 100 pesos, and 17 people had won the grand prize.

Asiaweek

It was only at the end of the May that things went wrong. Somewhere along the line, the computer system involved with printing the caps had a critical glitch. Instead of only printing two winning number caps, like it was meant to…it printed eight hundred thousand.

Bernard Bisson/Sygma via Getty Images

Nobody knew until it was too late. It was easy for workers, who were overseeing a lightning-fast automated process in a giant factory, to miss the fact that winning number 349 was being marked onto those tiny bottle caps nearly a million times.

Allan Tannenbaum/Getty Images

In fact, the error went totally unseen until the night of May 25th. It was on that night that, as the country settled around television stations tuned in to Channel 2 News, clutching their bottle caps and praying, the winning number was called: 349.

Geric Cruz for Bloomberg Businessweek

Immediate joy ensued. Thousands of people leapt from their chairs, crying, laughing, all believing that they’d won the grand prize. It was a moment that was to be short-lived — as people began preparing to go to their nearest Pepsi plant to claim the prize, they realized their neighbors were doing the same.

IUF

By 3:00 in the morning, it was abundantly clear that Pepsi had a huge problem on its hands. Thousands of supposed winners were already beginning to assemble outside the factory gates. Pepsi’s top executives rolled out of bed for an emergency meeting.

Melvyn Calderon/Liaison

At the debriefing, they found that while only two of the #349 caps also contained the required security number to make those caps actual winners, consumers were unlikely to check the security codes. And the number of winners kept rolling in — over 400,000 people had a cap bearing 349.

Geric Cruz for Bloomberg Businessweek

So, at 3am, Pepsi made a decision. They couldn’t possibly pay out a million pesos to everybody: it would cost $16 billion USD. Rather, they decided to honor the caps by paying between $18 and $20 USD to everyone with #349.

Antonio Lopez

As day dawned, the crowds at the gates were becoming furious. Pepsi released its announcement, soothing some consumers’ anger, but thousands more were still boiling over. They weren’t concerned about a computer error; Pepsi was a multinational corporation, had promised them hope, and should pay for its mistake.

When Pepsi refused to pay in full, trouble really began. The crowds refused to leave, and began to protest. When that didn’t work, they targeted Pepsi delivery trucks — overturning, burning, and throwing rocks at over 30 of them.

Filipino Reporter

Pepsi began to worry. They put up barbed wire around factories and offices, but that didn’t help. As protests turned to riots, angry consumers organized into factions, like Coalition 349 and the 349 Alliance, and sued the company while encouraging a boycott of all Pepsi products.

Romeo Gacad

People lobbed Molotov cocktails through Pepsi office windows and threw homemade grenades at trucks. One grenade bounced off, killing a teacher and a five-year-old girl. Pepsi officials hired bodyguards and armed delivery guards, and many fled the country, but the wildest twist was yet to come.

Brian Abbott

In December 1993, the protests had begun to fade, but a revelation took the press by storm: Artemio Sacaguing, who was chief of the National Bureau of Investigation’s organized crime unit, disclosed that three men had come forward and admitted to being paid by Pepsi to damage company property.

nathanielparish/Instagram

The men had been given the codename Three Kings by the company. Their motivation for doing this, Sacaguing reported, was that Pepsi would then be able to write off the protestors as violent terrorists and be more successful in defeating them in court.

However, Pepsi officials obviously denied it. Sacaguing’s report didn’t have much effect, and by 1994, the public had moved on and the government had declared Pepsi to be not at fault. This wouldn’t be the last time they’d land in hot water over a marketing decision.

The Filipino Express

In 2017, during the height of the Black Lives Matter movement, Pepsi took a page from national anti-police-brutality marches and ran an ad where Kendall Jenner brokers peace by giving a Pepsi to an officer.

PepsiCo

The commercial was a disaster. Pepsi’s in-house ad team had failed to realize that their creation trivialized the real efforts of civil rights activists, and Martin Luther King Jr.’s daughter tweeted about it. Company president Brad Jakeman resigned six months later.

Bernice King

When the dust settled, Pepsi’s reputation, on a global scale, remained mostly unscathed. Executives found better ways to approach sensitive topics by learning from some of the worst marketing disasters in history.

Kennedy News

Pepsi’s biggest competitor Coca-Cola spent $4 million on a 1990 promotion where they placed actual paper cash, anywhere from $1 to $500, inside brand new “MagiCans” of soda.

Coca-Cola

Besides the obvious gross factor of having dirty, damp money inside your Coke, the cashless decoy cans became a problem, too, after weighted compartments inside leaked chlorine and ammonium sulfate into the Coke. The promotion was cut short, and only 120,000 cans were ever sold.

Coca-Cola

The same year that Pepsi had their terrible idea in the Philippines, the Hoover vacuum company ran an equally disastrous campaign. In order to sell off a product surplus, Hoover’s U.K. division began a promotion offering two round-trip tickets to the U.S. with any purchase of £100 or more.

But intercontinental flights cost far more than £100, a fact Hoover forgot. The company lost £48 million on the promotion. The financial hit was so bad that their entire U.K. operation had to be bought out by an Italian manufacturer.

Hoover

What happened to SunnyCo Clothing? In early 2017, the fledgling swimsuit company ran an Instagram promotion, promising a free red swimsuit to anyone who re-posted an image and tagged the company. “Just pay shipping,” they said — but it was SunnyCo who ended up having to pay.

SunnyCo Clothing

Within a day, the image had been reposted thousands of times. With so many orders, SunnyCo took months to make good on their promise, and sustained massive financial damages in refunds to angry shoppers. The company barely survived and has kept a low profile ever since.

At least SunnyCo didn’t do anything offensive to promote their products. In February 2020, Barnes & Noble tried to honor Black History Month by taking novels by white authors and redesigning the covers to cast black characters…and immediately received backlash.

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The internet lit up about it, and the bookstore’s move was universally labeled as “fake diversity” by both readers and authors. “It is not sincere or a solution,” said Bitni series author Dr. Nnedi Okorafor, below. Barnes & Noble canceled the campaign, but not before the damage was done.

WikiCommons

In 2009, the World Wildlife Fund made light of national tragedy by comparing a tsunami in Asia to the 9/11 attack. They produced an ad representing the tsunami’s catastrophic death toll as hundreds of planes flying toward the World Trade Center.

Wikimedia Commons / David Rydevik

Even though the ad only ran once in Brazil, the WWF suffered a serious blow. The worst part was that the ad was intended to be offensive: the agency did it on purpose, hoping it would win big awards for its boldness.

World Wildlife Fund

The 1999 shoe company Just For Feet committed a racial blunder, too. They spent $2.9 million on a Super Bowl commercial in which a Kenyan runner fled, barefoot, from white troops, who tracked him down in a Hummer, drugged his water, and put Just For Feet sneakers on him.

Just For Feet

The ad crashed and burned, alongside of its many problematic implications, and the company burned along with it. Just For Feet tried to sue Saatchi & Saatchi, its ad agency, but abandoned the suit and filed for bankruptcy.

Just For Feet

It’s a good idea to steer clear of making any offensive statements in ads at all, but no one told Holiday Inn. In 1997, the chain ran a commercial, promoting improvements to their hotels in excess of $1 billion.

Holiday Inn

The commercial tried to show how far Holiday Inn’s dollars would stretch by showing a woman who’d had cosmetic work done, and announcing what each surgery cost. The woman also happened to be transgender, to the horror of her onscreen classmate. Amid justified backlash, the ad was pulled.

Holiday Inn

Another body-unfriendly ad was the viral Peloton campaign. Launched in December 2019, this commercial featured a woman whose husband gifts her a Peloton stationary bike for the holiday. The woman, already fit, spends hours biking away, but the expression on her face looks terrified rather than delighted.

Peloton

The ad was called “sexist and dystopian,” and Peloton’s stock dropped 9%. Some humor came of it, though: just days after the ad aired, Aviation Gin released a commercial with the same Peloton actress, drinking her exercise sorrows away with a smooth beverage.

Aviation Gin / The Gift That Doesn’t Give Back

Internet memes can bring down the mightiest of corporations, and in 2006, even Chevrolet was not immune. They ran a campaign allowing audiences to create Tahoe ads using Chevy-provided footage; users could write their own captions over the video.

YouTube / Dan Katz

The internet loved it. The DIY ads went viral, and instead of promoting the Tahoe, the captions were laden with profanity, called Chevy out for being environmentally unfriendly, or just took on an internet-typical gory tone. Chevy rode it out for a few days, but then axed the campaign.

YouTube / wonderweasel

11. Winston Cigarettes: The 1960s were a different time. Smoking was an openly accepted habit that most people indulged in. So, when Winston cigarettes used the images of beloved cartoon characters puffing away, it was less scandalous.

Winston Cigarettes

Today this commercial is concerning because of the message it sends children. Particularly when at the end of the spot, Fred Flintstone himself jauntily sings the company slogan between drags on a cigarette, “Winston tastes good like a cigarette should!”

Winston Cigarettes

12. Groupon: The popular money-saving app Groupon aired a Super Bowl commercial in 2011 that began with somber discussion about the people of Tibet. The voice explained how their culture was in danger while showing images of Tibetans.

Groupon

The ad changes gears quickly when one of the people on the screen becomes a waiter at a restaurant. Then, actor Timothy Hutton discusses saving money on his fish curry at a Tibetan restaurant thanks to Groupon. The flippant tone was ill-received.

Groupon

13. National Airlines: Tongue-and-cheek methods of advertisement can be popular. But, in 1974, National Airlines took it a step too far. For one, the entirety of the commercial is basically just a young woman in a bikini.

National Airlines

She then proceeds to ask the viewer to “fly her.” She states, “You can fly me morning, afternoon or night.” This not-so-subtle hint towards unsavory acts didn’t exactly hit home with viewers, causing outrage among family watchers while others thought it was brilliant.

National Airlines

14. McDonald’s: During the 1970s, everyone’s favorite fast food chain launched a series of commercials set in the fanciful “McDondonald.” It made waves, as they were sued for copying the popular T.V. show H.R. Pufnstuf.

McDonald’s

Another problem was the alleged false advertising in these commercials. In this magical world, burgers grew out of the ground like heads of lettuce. People believed that this misrepresented the harsh realities of the animal industrial complex while conflating burgers with vegetables.

McDonald’s

15. Chevrolet (again): In an attempt to inform the public about their steel enforced Silverado, Chevy representatives brought “real people, not actors” into a closed room with two cages. Then they ask the unknowing participants which cage they think is stronger.

Chevrolet

Then, the Chevy rep releases a huge Grizzly bear into the room and implores the participants to pick a cage to protect them. They all choose the steel cage thus proving the point of the commercial. But at what cost?

Chevrolet

16. Jeno’s Frozen Pizza: This 1960s advertisement for frozen pizza reads like a classic noir film. The dark lighting, dramatic swells of music, and a possibly menacing individual sneaking around a house is the commercial version of The Maltese Falcon.

Jeno’s Pizza

The man dramatically scaling the stairs reaches the top. He surprises a doe-eyed Jane Greer type and shows her his frozen pizza. He then, unprompted, hits her with the pizza box. Like, three times. Their insensitivity to domestic violence didn’t go unnoticed.

Jeno’s Pizza

17. Fritos: Bandito was the Frito chip mascot in the ’60s and ’70s. His obvious stereotype outraged many members of the Mexican community, especially because of his quick temper and constant possession of fire arms.

Frito Lay

Interestingly, the community was divided as some people approved of the caricature. This allowed the bandito to inhabit American T.V. screens for awhile. They ended up cleaning up his image slightly, but kept on with the basic idea of him for years.

Frito Lay

18. McDonald’s (again): The burger chain made the list again with a 2017 misstep that aired in the U.K. The commercial follows a mother explaining to her son what his deceased father was like. The boy sadly notes how different he is from his father.

McDonald’s

They head to McDonald’s, and the boy orders the Filet-O-Fish when the mother says that sandwich was also his father’s favorite order. The boy smiles, realizing he is like his father after all. People accused McDonald’s of using grief to sell fast food.

McDonald’s

19. Edeka: The German company Edeka upset a lot of people when their 2015 holiday advertisement aired. The commercial follows a lonely old man who received word that his family won’t be able to make it to see him for the holidays.

Edeka

Cut to the same people coming together headed to the old man’s house presumably because of his death. They enter, and tearfully notice that he has set a table for them and is very much alive. The delivery was harsh, but the message wholesome.

Edeka

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