The Computer Error That Led to a Country Declaring War on Pepsi

iStock
iStock

On May 25, 1992, the Channel 2 News program in Manila, Philippines aired a segment that had been running since February of that year. Each night, the station alerted viewers to the day’s winning number in Pepsi’s Number Fever promotion. Buying a specially marked Pepsi product allowed consumers to match the number underneath the bottle cap to the announcements. While most prizes were just 100 pesos (roughly $5 in today’s U.S. currency), there was an opportunity to win the grand prize of one million pesos, or the equivalent of $37,000 to $40,000.

The Philippines was a country struggling with a modest economy and widespread poverty, and that grand prize was perceived as a life-changing amount of money. So when 349, that night's winning number, flashed on screen that night, tens of thousands of Filipinos couldn’t believe their luck. The number was associated with the largest prize in the sweepstakes. The next morning, Pepsi plants in Manila were overrun by people toting their 349-emblazoned bottle caps and looking for the promised reward.

There wasn’t one.

Only two of the grand prizes were supposed to have been doled out. Instead, Pepsi had somehow manufactured 800,000 caps with the winning number. Consumers were told the company had made an error and were turned away in droves. Barbed wire was erected around the plants. Riots, boycotts, and picketing ensued. Homemade bombs were launched at bottling factories. In the words of one Pepsi executive, “we had death threats for breakfast.”

The giveaway was intended to boost sales. Instead, Pepsi executives were not only bleeding market share—they were suddenly in fear for their lives.

 

As the perennial number two in the cola industry, Pepsi had engaged in several promotional attempts over the years to compete with rival Coca-Cola. In 1989, they marketed Pepsi A.M. as an alternative to coffee. (It had 28 percent more caffeine than regular Pepsi.) The product didn’t catch on, nor did the company’s expensive attempt to recruit pop star Madonna that same year. Stung by controversy over her religious-themed “Like a Prayer” video, the company pulled advertising featuring the singer despite having paid her $5 million for the endorsement.

Their Number Fever campaign didn’t appear to carry the same risks. Pepsi saw only upside: In the Philippines, then the world's 12th largest market for soft drinks, the company was a distant second to Coca-Cola. The promise of winning anything from a modest amount of money to 1 million pesos was enough to spike sales 40 percent, capturing 26 percent of the country’s market share. From February to May, 51,000 people had won 100 pesos, while 17 had captured the grand prize.

To determine winning numbers, Pepsi recruited D.G. Consultores, a marketing firm based in Mexico. The numbers were generated via computer, then secured in a safe deposit box in Manila. From there, the list would be used to “seed” bottle caps in the bottling plants. Each night, the company would announce the day’s winning number on television.

A Pepsi bottlecap is pictured against a blue background
iStock

Somehow, that system went awry. A computer glitch told bottlers to print 800,000 caps with the 349 designation, although all of them except for two lacked a special security code that proved the cap was authentic. That detail was irrelevant to consumers, who saw that they had the number and proceeded to demand the prize they felt was owed to them—a number that eventually grew to 486,170 people. (Though more caps were printed, not everyone noticed they held a “winning” number.)

Quickly, Pepsi executives in the Philippines and stateside convened for an emergency meeting at 3 a.m. on how to proceed. Economically, honoring the perceived value of all of the caps was virtually impossible to justify—it would’ve cost the company tens of billions of dollars. Instead, they opted to declare it a computer error and offered $18 to $20 to cap holders as a “goodwill gesture.” What was originally earmarked to be a promotion with $2 million in total prizes ballooned to $10 million.

While some accepted the prize, most consumers were livid. Pepsi, they argued, had raised the hope of lessening their financial burdens. They didn’t care about a clerical mistake. Pepsi was a massive conglomerate and should accept fault.

The company disagreed, and that's when the trouble began.

 

Pepsi delivery trucks became an early and frequent casualty of the war on the soft drink manufacturer. Between 32 and 37 trucks were overturned, burned, stoned, or otherwise vandalized by protestors, many of whom took to the streets with signs and bullhorns to voice their displeasure over the company's wrongdoing. Corporate Pepsi offices were targeted by Molotov cocktails, makeshift explosives that crashed into windows and front lawns. One homemade grenade intended for a truck kept rolling and landed near a schoolteacher, killing her and a 5-year-old student and wounding six others.

Fretful Pepsi executives hired bodyguards, armed passengers in delivery trucks, and pulled expatriates from the country, leaving just a handful—including one with experience in Beirut—to face the angry mobs, which were quickly becoming organized. Several spun off into factions, including Coalition 349, which took a systematic approach to shaming Pepsi into paying up. After electing a leader, Vicente del Fierro Jr., they printed anti-Pepsi tracts and called for product boycotts. Paciencia Salem, a then-64-year-old protestor whose husband died of heart failure while marching in opposition, declared that the company would never see relief.

“Even if I die here, my ghost will come to fight Pepsi,” she said. “It is their mistake. Not our mistake. And now they won’t pay. That’s why we are fighting.”

Protestors voice anti-Pepsi sentiment during a rally in Manila
Romeo Gacad, AFP/Getty Images

Though Pepsi was reticent to respond to these impassioned revolts, calling it “extortion,” they were compelled to answer questions from the Philippines government. Senator Gloria Macapagal Arroyo called the mistake “negligent,” while thousands of civil and criminal complaints flooded state prosecutor offices. A crop of “speculators” even offered to buy the caps for $15, betting that the company might one day relent and agree to pay the full prize amount.

The tumult stretched well into 1993, at which point a sensational new twist captured local headlines. In December of that year, a police officer filed a report alleging that the bombings and riots were not the result of protestors. They were, he insisted, deliberate acts of self-sabotage by Pepsi against itself.

The accusation, which was reported in the Chicago Tribune, came from Artemio Sacaguing, chief of the organized crime division of the country’s National Bureau of Investigation. In his brief, Sacaguing reported to Manila prosecutors that a man had confessed to being a Pepsi security guard and knew of three mercenaries who were hired by the company to damage their property. In doing so, Sacaguing claimed, they could portray the anti-Pepsi groups as being violent and labeled as terrorists, harming their position in court.

Almost immediately, Sacaguing’s superiors dismissed his accusations and stated that the official’s report had already been discredited. A Pepsi lawyer refuted the allegation; Senator Macapagal Arroyo floated a slightly more plausible theory. Rival bottlers, she said, were acting out in order to weaken Pepsi’s grip on the market.

 

Slowly, Pepsi’s black eye in Manila began to fade. Most of the civil suits (689) and criminal complaints (5200) were tossed out of court. Sensing that the company had more determination to remain in the country than protestors had the time or energy to continue marching, the anti-Pepsi sentiment began to dim. By 1994, their market share had rebounded from a low of 17 percent post-scandal to 21 percent. A 1.5 liter “mega bottle” was a brisk seller.

In 2006, a Philippines Supreme Court ruling closed the book on the outstanding court cases and potential liability, finding that Pepsi was not obligated to honor the sweepstakes payout due to the error. It was a prolonged, if satisfactory, conclusion to the controversy.

Soda companies continue to perpetuate giveaways as a method for raising awareness, though there’s always risk that consumers want to push the envelope. In 1996, Pepsi offered prizes for people who collected points based on product purchases. One ad facetiously offered a Harrier fighter jet to anyone who submitted 7 million points. John Leonard, a 21-year-old business major, decided to take the company up on their offer to buy points for $.10 each. After raising $700,000, he demanded his jet, but Pepsi declared the prize offering was just a joke. A court agreed, granting summary judgment to the soda company. In future airings of the ad, they increased the number of points needed from 7 million to 700 million.

QVC's Strangest Gift Item: The Poopin' Moose

lemonmmermaid via YouTube
lemonmmermaid via YouTube

The official name of woodworker Darryl Fenton’s novelty item was the Wooden Moose Candy Dispenser. Handcrafted in his Wasilla, Alaska workshop, the unfinished, sanded animal carving had a rectangular opening in the back that could be stuffed with candy pieces. When the moose’s head was lifted, it dispensed the candy in a way that resembled a bowel movement. 

QVC sold 30,000 of them in 10 minutes.

Colloquially known as the Poopin' Moose, the wooden gift was discovered during the shopping network’s 50 state tour in 1997. Arriving in Alaska, buyers were presented with the moose by Glenn Munro of Unique Concepts, which had licensed the moose from Denton. The carving had been sold at regional fairs; QVC, knowing a demonstrable item when they saw one, agreed to put it on the air, leaving the sales pitch to its team of accomplished hosts.

"What better way to dispense your candy than through the butt of a moose?" wondered host Pat Bastia. Others stuffed brown M&Ms into the moose; host Steve Bryant pondered whether or not putting a Hershey chocolate bar in the item would result in diarrhea. When the moose became clogged with peanut candies, Bryant declared it "constipated" and inserted a finger to remove the blockage.

Denton, who had patented the device in 1995, couldn’t handcraft enough to meet demand. He outsourced production to several other plants; via Unique and other outlets, he sold over 100,000 in the late 1990s and early 2000s.

As the moose’s profile grew, Denton added animals that could defecate treats on demand: buffalo, mules, bunnies, and alpacas. He produced a premium Millennium Pooper—a walnut-carved moose with ivory eyes—and sold it for $150. A Pocket Pooper that miniaturized the moose was available for a brief time.

Unfortunately, Denton’s commitment to his craft would prove to be his undoing. In 2004, a rival poop gift named Mr. Moose was released. Offering a similar experience to the Poopin’ Moose, it was made in China and retailed for just $25, a fraction of the $100 handmade version. Suffering from neck problems and a financial crunch, Denton decided to discontinue further production. It never again appeared on QVC’s airwaves, a fact that disappointed onetime host Bryant, who spoke to author David Hofstede in 2004.

"It was handcrafted, provided jobs for people in Alaska, and it pooped M&Ms," he said. "How cool is that?"

Udder Success: The 'Got Milk?' Campaign Turns 25

Christopher Polk, Getty Images for Got Milk?
Christopher Polk, Getty Images for Got Milk?

Shortly after he was hired as the executive director of the California Milk Processor Board, Jeff Manning had an epiphany. It was 1993. Sales of milk were sagging both in California and nationwide. Milk industry advocates had spent much of the 1980s promising that “Milk Does a Body Good,” with an ad campaign focused on its calcium and protein benefits. Consumers knew milk was good for them. But Manning realized they just didn’t care.

Instead, the ad agency Manning hired to revamp milk’s reputation focused on the complete opposite. Rather than dwell on everything milk could do for them, they decided that television spots should highlight the consequences of going without milk. Maybe it meant having trouble chewing a dry peanut butter sandwich or cookie. Or not being able to enjoy a bowl of cereal. During a brainstorming session, ad partner Jeff Goodby of Goodby Silverstein & Partners jotted down a tagline: “got milk.” Then he added a question mark. And for the next two decades, the Got Milk campaign, and its slogan, became as ubiquitous as Nike’s declaration that athletes “Just Do It.”

As recognizable as the ads were, sales figures told a slightly different story. While more people may have been thinking about milk than ever before, that didn’t necessarily mean they were drinking it.

 

As a result of public education and private health care, milk was a staple of kitchens everywhere in the 1950s and 1960s. Early 20th-century studies of questionable veracity fed milk to rats and marveled at their shiny fur. (Rats that got vegetable oil were scrawny.) Children lined up in front of steel milk containers at schools to get their daily serving; pregnant women were told copious amounts would be good for their baby. For many people, mornings were marked by the sound of clinking bottles of milk left on doorsteps, as common as mail delivery.

In the 1970s, a shift began. Milk, while still considered a fundamental part of diets, was seeing increased competition from soft drinks. Aggressive marketing campaigns from companies like Coca-Cola and Pepsi positioned soda as fun to consume, offering caffeinated energy and enticing packaging that sometimes promised prizes. Milk, in contrast, was plodding along in plastic or cardboard containers. If there was any carton design at all, it was typically a simple illustration of a cow. Drinking it became almost perfunctory.

By the 1990s, milk was under siege by soft drinks, sports drinks, and Snapple, which cloaked some of its sugary offerings in an all-natural aesthetic. Milk was on the ropes: Continuing to insist it was a healthier option was no longer effective, nor was it enough.

Research by Goodby Silverstein & Partners revealed an alternative. When discussing milk consumption, consumers kept returning to the idea that running out was a source of frustration. While they may not have longed for milk as a rule, the times they could have used it—in coffee, for cookies, for cereal—and didn’t have it gave them a fresh appreciation for the beverage. When the agency put a hidden camera in their own offices to capture their staff's reaction to running out of milk, they noted it was one of disappointment. (And sometimes expletives.)

With Manning’s consent, the ad agency decided to focus on a “Milk and …” campaign, highlighting all the ways milk and food go together. That was ground down further, with Goodby and his partners making an open-ended question of a milk-deprived scenario. “Got Milk?” would present a worst-case scenario, letting consumers ruminate on the consequences of finding an empty carton. The ads would be funded California's major milk processors, with three cents from each gallon of milk sold going toward the campaign—which amounted to approximately $23 million annually.

The first televised spot for “Got Milk?” is probably still the best-known. It features a radio listener eating a sticky peanut butter and jelly sandwich while following along with an on-air trivia contest. When the host wants to know who shot Alexander Hamilton, the man knows it’s Aaron Burr. But without milk to wash down his food, it comes out as “Anon Blurrg.”

The spot, which was directed by future Transformers filmmaker Michael Bay, was an immediate sensation when it premiered in October 1993. More than 70 spots followed, many presenting a similar doomsday scenario. In a Twilight Zone premise, a man arrives in what he believes to be heaven only to find he has an endless supply of cookies but only empty cartons of milk. In another spot, a newly-married woman expresses disappointment in her choice of a spouse. He thinks it's because he bought her a fake diamond; she's upset because he emptied a carton. Time after time, a lack of milk proves uncomfortable at best or life-altering at worst.

If the milk industry had stuck with “Got Milk?” and nothing else, it probably would have remained a cultural touchstone. But in 1995, the campaign got an additional boost when the Milk Processor Education Program, or MilkPEP, another pro-milk lobbying group, licensed the slogan to use with their own growing milk mustache print ad campaign spearheaded by the Bozell Worldwide ad agency. Celebrities like Harrison Ford, Kermit the Frog, and dozens of others appeared with a strip of milk across their upper lip. Manning also agreed to license the tagline to third parties like Nabisco—which printed it on their Oreos—and Mattel, which issued a milk-mustached Barbie. Cookie Monster endorsed the campaign. At one point, 90 percent of consumers in California were familiar with the “Got Milk?” effort, an astounding level of awareness.

Being amused by the spots was one thing. But was anyone actually drinking more milk because of them?

 

Milk lobbyists in California pointed out that the ads arrested the decline of milk consumption that had plagued the industry for decades. In 1994, for example, 755 million gallons were sold in the state, up from 740 million gallons in 1993. Manning also cited figures that indicated "Got Milk?" helped halt a slide that could have cost the industry $255 million annually in California alone—a drop-off that was stopped by that $23 million in ad spending.

But overall, it was tough for milk to regain some of the lost loyalty it had enjoyed in the 1950s. Between 1970 and 2011, average consumption went from 0.96 cups daily to 0.59 cups. With so many beverage options, consumers were often pushing the milk carton aside and reaching for Gatorade or soda instead. Changes in food habits didn’t help, either. Fewer people were eating cereal for breakfast, instead looking for yogurt or other low-calorie options.

“Got Milk?” was informally retired in 2014, replaced by a “Milk Life” campaign that once again brought nutrition back to the forefront.

Today, the average American drinks roughly 18 gallons of milk per year. (Unless, of course, they’re lactose-intolerant.) In 1970, it was 30 gallons. But there is hope: Plant-based milk made from almonds and other less-conventional sources are growing in the marketplace. “Got Coconut Milk?” may not be as catchy, but it might soon be more relevant than the alternative.

SECTIONS

arrow
LIVE SMARTER