In the 1990s, Pepsi ran the worst advertising campaign in its history. The soda maker promised that Filipinos could find 1 million pesos (about $20,000) in winnings under the caps. A factory error led to the accidental release of 600,000 winning caps and devastating consequences for the company.
In this article, we will tell you about grandious “600 million mistake” by one corporation, after which it not only survived, but pretended it never happened.
Filipinos have hated Pepsi ever since. The whole country has disliked the company’s name for almost 30 years. Here it is considered a disgrace to work for Pepsi or to sell that soda. In marketing, this case is considered one of the loudest failures in history.
On the evening of May 25, 1992, a federal channel announced the winner of a powerful marketing campaign, in which 65 million Filipinos participated. About 70 percent of the country’s people clung to their screens. At 6 p.m., the winner’s coveted number was to be announced.
Many people spent their last money on bottles of the special “Number Fever” series. The rules were simple: under the cap was a number from 001 to 999. Once a week, the media announced the winning numbers and announced the amount of the prize. Amounts ranging from 100 (about $2) to 1 million pesos (about $20000) were drawn.
To give you a better idea of how much excitement this advertising campaign generated, here are a few numbers: 1 million pesos was 610 average salaries in the country. That is, one such win provided the average Filipino with a salary for 50 years to come. Unfortunately, the odds of winning were tiny: at only 1 to 28 million.
By the time of that sensational raffle, 18 grand prizes worth $1 million had already been drawn and paid out. One of the winners was Nema Balmes. She had worked as a bus driver, and after she won, she gained national fame and the nickname “Miss Pepsi.” People believed that anyone could win the jackpot.
And so, after the evening newscast, the anchor announces that number 349 wins the 1 million pesos prize. At that moment, thousands of people all over the country begin to dance and laugh with joy. They already imagine giving up their hard work and what they will spend their winnings on.
But something went wrong.
The Pepsi factory was only supposed to make 2 caps with this number, but due to a computer error they produced 600,000 pieces. If converted into money, the entire batch of caps produced was worth $12 billion! That is, Pepsi simply could not give away such astronomical winnings.
People didn’t know and didn’t realize it. In some parts of the country, a real celebration began. All those thousands of “winners” were celebrating the beginning of a new life. They had no idea they had made a mistake. Some of them even discovered that they had several winning caps at once. People cheered and congratulated each other. And a little later, clutching the cherished caps in their hands, they went to the factory to get their money.
There will be no carnival
Pepsi’s management was in complete shock at what had happened and, locked in their offices for nearly twenty-four hours, was working out a strategy for dealing with the situation. They discussed the situation with the Philippine Department of Commerce and tried to explain that a mistake had been made.
At first the company tried to change the winning number and the morning papers came out announcing that the “134” cap had won, but this only made things worse. Those who had gathered began shouting insults and throwing stones at the factory building.
The situation quickly heated up, and Pepsi management had to announce that they were offering the failed millionaires compensation of 500 pesos (about $10) for each cap with the number “349” on it.
Although people were furious, most of them agreed to accept the money. The compensation for 480,000 people cost Pepsi 240 million Philippine pesos (five times the budgeted amount), but the company’s misery was not over.
The Coalition 349
The remaining 120,000 people refused the 500 pesos and insisted on full payment. They united in the “Coalition 349. They began holding regular rallies, boycotting soda, and attacking company property and employees.
Rumor has it that this organization was supported and sponsored by the local CEO of Coca Cola. This is the man who will benefit for years to come from the competitor’s failed advertising campaign. Coke’s sales instantly soared and became three times the size of Pepsi’s.
Crowd aggression went as far as attacks on warehouses and cars. Coalition members stoned 37 Pepsi trucks, and company executives received threats every day. The soda trucks were forced to move through the streets with armed guards.
About 10,000 people banded together and filed a class action lawsuit against Pepsi. In 1996 the trial court awarded them 10,000 pesos ($200) each as moral damages. The decision was appealed and the process dragged on for another 10 years. In 2006, the Supreme Court acquitted Pepsi entirely and ruled that it was just a computer error, the company had no malicious intent and therefore was not responsible for what happened.
Pepsi’s unsuccessful marketing campaign not only caused riots in the streets, but also ended in the rise of anti-American sentiment in the Philippines. The U.S. even had to close its military bases. The country was ready to give up millions of dollars that the states paid in annual aid.
The situation is still remembered by many today, and the phrase “became the 349th” means that one was cheated. Since that time, Pepsi has not even risked any promotional activity in the Philippines.