Pepsi’s advertisements, splashed for weeks all over Philippine newspapers, radio and TV, were hardly subtle: “Today, you could be a millionaire!”
From her tin-roofed shack in one of Manila’s more squalid slums, Victoria Angelo couldn’t resist. The unemployed mother of five and her husband, Juanito, who pedals people about in his three-wheeled cab for about $4 a day, began drinking Pepsi with every meal and snack. Each morning, the family prayed for a specially marked bottle cap. And each night, they and their neighbors flocked around a small television to see if their prayers were answered.
And then, a miracle!
On May 25 last year, the nightly news announced that anyone holding a bottle cap marked 349 had won up to 1 million pesos, about $40,000, tax-free.
Spreading her collection of caps on a table, Victoria Angelo screamed, “We are a millionaire!”
Her voice ringing with excitement, she recalled that she turned to her family: “I tell my children you can finish school and go to college. I tell my husband he can buy a (passenger jeep). I tell myself we can buy a real house. Can you imagine? It is a dream come true!”
But her dream has become a nightmare for New York-based Pepsico Inc. In a marketing mistake that surely must rank among the world’s worst, Pepsi had announced the wrong number. Instead of a single 1-million-peso winner, up to 800,000 bottle caps marked 349 had been printed. And tens of thousands of Filipinos soon began demanding billions of dollars that Pepsi, not surprisingly, refuses to pay.
The dispute--on which Pepsi has spent millions of dollars--has sparked a Cola War, Philippine-style. Pepsi records show that at least 32 delivery trucks have been stoned, torched or overturned. Armed men have thrown Molotov cocktails and homemade bombs at Pepsi plants and offices.
In the worst incident, police say a fragmentation grenade tossed at a parked Pepsi truck in a Manila suburb last Feb. 13 bounced off and killed a schoolteacher and a 5-year-old girl and wounded six others.
Pepsi executives here have gotten so many death threats they use round-the-clock bodyguards and vary office hours and travel. Other heavily armed guards ride shotgun on Pepsi trucks. The company has withdrawn all but two expatriates, leaving an official in charge who has experience in Beirut.
And suing Pepsi has become the choice of a new generation. Criminal and civil claims filed against Pepsi across the Philippines far outnumber those against the late President Ferdinand E. Marcos and his wife, Imelda, who are accused of looting up to $10 billion during their reign.
At last count, more than 22,000 people have filed 689 civil suits seeking damages from Pepsi, plus more than 5,200 criminal complaints for fraud and deception, the company says. Only a handful of trials have begun, but the nation’s appeals court this month upheld arrest orders against 10 local Pepsi executives. The company has appealed, and no arrests have been made.
Even more remarkably, in a country crippled by daily electric blackouts, endemic corruption and poverty that is among the most pervasive in Asia, the only protests that regularly draw angry crowds into the streets are those against Pepsi. In ways the government never could, the anti-Pepsi fever has brought together Communist rebels and army generals, well-dressed Manila matrons and barefoot rural peasants. All hold 349 caps.
“This has united the people. . . . Pepsi has cheated the Philippine people,” Bhambi Santos, an anti-Pepsi activist and evangelist, bellowed into a bullhorn at a recent rally of several hundred banner-waving, drum-beating people in Manila’s business district.
The protest ended abruptly moments later when a rock tossed from the crowd smashed a window in the government’s trade and industry office, which had approved the Pepsi promotion.
Such violence reflects conditions in the Philippines, where foreigners, particularly Americans, are frequently blamed for this country’s problems.
Kenneth Ross, spokesman for Pepsi-Cola International, which owns 19% of the local bottling company, said the company’s position is clear. “We will not be held hostage to extortion and terrorism,” he said in a telephone interview from Purchase, N.Y.
But unlike Pepsi’s cool crisis management in the United States after false reports spread that syringes were found in Pepsi cans, company officials here panicked. When mobs rioted after the bottle-cap error was announced, frightened executives decided at a pre-dawn meeting to offer $20 in pesos to anyone with a 349 cap.
“They made two mistakes,” said one official, who like all local Pepsi employees asked not to be identified. “You should never make a decision at 3 a.m. And they thought it was a few thousand people at most.”
To their horror, at least 486,170 cap-holders already have flooded in. Pepsi, which had budgeted only $2 million for prizes, had to pay $10 million more for what it calls a “goodwill gesture.” It also agreed to pay $6,000 to the government’s consumer protection bureau, the maximum penalty under the law.
“We have done everything that we think is reasonable to amicably conclude this issue,” Ross said.
But Pepsi is clearly worried. A telling sign: In this basketball-crazed culture, the company changed the name of its professional team from the Pepsi-Cola Hotshots to the 7-Up Uncolas.
More important, Pepsi President Christopher Sinclair flew to Manila in early April for an unannounced meeting with Philippine President Fidel V. Ramos. A Ramos aide said that Sinclair pleaded for help, warning that the fiasco could harm government efforts to lure much-needed foreign investment.
But Ramos told The Times in an interview that he does not think Pepsi’s predicament will discourage other investors. “It’s a special kind of case,” he said.
That it is. Pepsi has run similar promotions around the world, from Mexico to Singapore. A garbled fax led to a wrong number being announced on TV in Chile last year, and that case is in court there. But only in the Philippines has the Pepsi generation taken up arms.
“We haven’t had bombs thrown at our offices anywhere else,” Ross said angrily. “We haven’t had bombs thrown at our trucks. We haven’t had innocent people lose their lives.”
Pepsi has been burned before in the Philippines. This is the world’s 12th-largest carbonated soft-drink market, and competition is fierce. In the late 1970s, at the height of Marcos’ corrupt rule, Pepsi led the huge market--but at huge cost. Pepsi ultimately lost nearly $90 million in what Ross calls “accounting irregularities and overstated profits.”
Coca-Cola has controlled most of the market since. Then came Pepsi’s “Number Fever.” After the promotion was launched in February, 1992, sales of Pepsi and its other brands including 7-Up, Mirinda and Mountain Dew zoomed nearly 40%.
As the weeks wore on, more than 51,000 people won cash prizes. The vast majority won the smallest prize, 100 pesos. But 17 people won 1 million pesos and were featured in Pepsi’s advertising blitz.
The system seemed foolproof. A consulting firm in Mexico, D.G. Consultores, used a computer to pre-select winning numbers. The list was sent to Manila and held in a safe deposit box. Winning caps and corresponding security codes, to prevent counterfeits, were secretly printed and seeded at bottling plants across the country. Numbers were announced nightly.
Until disaster hit. On May 25, Channel 2’s nightly news routinely flashed the winning number: 349. By the next morning, thousands of winners had besieged Pepsi bottling plants. The company locked its gates and built barbed wire barricades.
Soon more winners began arriving in Manila on boats, buses and planes from across the archipelago.
The confusion--and violence--quickly escalated.
The anti-Pepsi crowds won support this month from Sen. Gloria Macapagal-Arroyo, head of the Senate’s trade and commerce committee, which held hearings on the dispute. Pepsi was “grossly negligent,” she said in an interview. “This was a travesty on the rights of consumers.”
But the senator also voiced a common conspiracy theory here. A few dozen elite families control much of the economy, and their tactics are sometimes literally cutthroat. She fears that a rival family-owned bottler is behind anti-Pepsi violence. “I suspect a rival group is whipping up the trouble,” she said.
Such suspicions, and the violence, say more about the Philippines than about Pepsi.
Still, it was a stunning slip-up for the company. Spokesman Ross repeatedly refused to explain how the mistake occurred. “This was a computer error,” he said.
That’s not good enough for cap-holders here. Thousands have joined anti-Pepsi organizations such as Coalition 349. The leader is Vicente Del Fierro Jr., a pudgy 45-year-old public relations consultant and lobbyist. Fierro holds a 1-million-peso bottle cap, but he insists that he took up the battle because “I would be remiss in my Christian obligations if I didn’t help these people.”
Fierro is well paid for his crusade. He said his group’s 15,000 members each pay him from $14 to $80 in annual fees. They must also sign pledges to give him 10% of any money they may get from Pepsi. In exchange, Fierro prints anti-Pepsi tracts and ads, campaigns for a national boycott and plans to visit New York for a month to consult with lawyers about suing Pepsi there.
“I pity Pepsi, I really do,” Fierro said, as he showed the poster-lined garage he has converted into his Pepsi war room. “I told Pepsi I’d like to offer my services as a PR consultant to help them rebuild their image after they have paid the claimants.”
Such offers leave a sour taste for Pepsi. “We think it horrible that what I call questionable elements have seized this issue for what appears personal gain,” Ross said.
Many Filipinos clearly do not agree. One Fierro fan, 64-year-old Paciencia Salem, wilted in Manila’s steam-bath heat one recent afternoon at an anti-Pepsi protest. Her husband, she said, died of heart failure after a similar rally last year. She said she is prepared to do the same.
“Even if I die here, my ghost will come to fight Pepsi,” she promised. “It is their mistake. Not our mistake. And now they won’t pay. That’s why we are fighting.”