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

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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
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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.

A Hazardous History of the Slip 'N Slide

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monkeybusinessimages/iStock via Getty Images

One day in the summer of 1960, Robert Carrier arrived at his home in Lakewood, California, and saw his 10-year-old son Mike laying in front of the garage. When he got closer, he noticed his son was laughing. The property had a painted concrete driveway, and when it got wet, its surface became slick. Mike and his friends had spent the afternoon turning on the garden hose, getting a running start from the garage—which was carpeted—and then belly-flopping onto the concrete, sliding all the way to the curb.

“You guys are going to kill yourselves doing this,” Carrier said. Yet he didn’t tell them to stop.

When the Carriers moved to a new home—which had a back patio painted with the same slick coating—Mike and his friends brought their garden hose antics with them. The fun and games continued until Mike ended up crashing through a gate and breaking it.

It was at this point that Robert Carrier decided that if his son was going to insist on sliding, he might as well try to make it as safe as possible.

Carrier was an upholsterer who happened to work for a company that produced boat seats and had access to a variety of materials. So he brought home a 50-foot roll of Naugahyde, a fabric coated in vinyl, which he unspooled on his property. Carrier curled the material over on one side and stitched it in intervals. When the hose was fed through the curl, water seeped through the holes and kept the surface wet.

The result was a backyard lane devoted to slipping and sliding. When Carrier saw neighborhood kids racing over and traffic on his street getting backed up, he decided to patent his invention. The application referred to it as a “portable aquatic play device for body planing.” He called it the Slip ‘N Slide—though he probably should have named it the Slip ‘N Sue.

 

Carrier and his business partner, Richard Eriser, took his idea to the Wham-O company, a brand devoted to celebrating off-kilter toys like the Hula Hoop and Frisbee. Wham-O was also inventor-friendly and open to outside submissions. They agreed to manufacture and market the Slip ‘N Slide with one adjustment: The expensive Naugahyde material would have to be replaced with plastic.

A child goes down a water slide
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The 30-foot-long, 40-inch-wide Slip ‘N Slide went on sale in 1961 and was an immediate hit, selling 300,000 units priced at $9.95 in a matter of months. Kids were instructed to unwind the material across an area free of rocks or debris and then stake it into the ground. The surface had a lubricant molded directly into the plastic that acted as a propellant, so that kids sprinting to the top of the slide would take off like human projectiles. Some kids even added dish soap to the water provided by their garden hose for additional propulsion.

The same year the Slip ‘N Slide was introduced, Wham-O officials observed an interesting phenomenon: The more fun kids had, the more compelled adults felt to try it. Initially, this wasn’t seen as a big deal; plenty of parents play with their kids' toys. But the Slip ‘N Slide had been engineered for children of limited height and weight, typically under 125 pounds. When adults jumped on the surface, they were not always jettisoned across. Sometimes their weight meant they would abruptly stop, the forward momentum driving the weight of their body directly onto their necks. This could be devastating for the spinal cord and it was possible to suffer quadriplegia, paraplegia, or even death as a result of the impact.

Between 1973 and 1991, it's estimated that a total of seven adults and one 13-year-old suffered neck injuries or paralysis as a direct result of using the Slip ‘N Slide. Though these instances were rare, Wham-O was apparently concerned to the point they opted to take it off the market in the late 1970s. It wasn’t brought back to store shelves until Wham-O was purchased by the Kransco company in 1982.

 

The Slip ‘N Slide had always carried warnings that it was for use by children 10 or 11 years of age and younger. But it was not a superficially dangerous-looking plaything, and adults either failed to take the warning seriously or simply discarded the box and instructions without paying any attention to them. As a possible result, Kransco experienced two major lawsuits that would elevate the Slip ‘N Slide to the level of a public nuisance.

A child goes down a water slide
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In 1987, Michael Hubert of Wisconsin used his neighbor’s Slip ‘N Slide and suffered a broken neck. The 34-year-old was left an incomplete paraplegic, meaning he had a limited ability to walk and use his hands. He sued Kransco over the injury. American Empire Surplus Lines Insurance Company, which insured Kransco, offered Hubert a $250,000 settlement, which he rejected. The case went to a jury trial in 1991 and Hubert was awarded $12.3 million. The jury declared the Slip ‘N Slide defective and unreasonably dangerous.

Kransco ultimately settled with Hubert for $7.5 million. They subsequently sued American Empire, claiming the insurance company could have settled for $750,000 but chose not to, leaving Kransco on the hook for paying the settlement above the $1 million they had in coverage. Kransco won that case and was awarded $17 million.

In 1988, a University of Central Florida student named Robert Goldstein broke his neck on the slide. He also sued and was awarded $1.6 million in 1995. John C. Mitchell II, the lawyer who represented Goldstein, later said he believed the lawsuits influenced Kransco to take the Slip ‘N Slide off the market in 1991. But that was far from the end of the controversy.

In 1993, the U.S. Consumer Product Safety Commission (CPSC) issued a recall notice in conjunction with Kransco to alert consumers to the dangers of the slide. Though it had been discontinued, 9 million had been sold between 1961 and 1992 and an unknown number were still available in stores. (A total of 30 million slides were sold through 2011.) The CPSC warned the slide was for children and that adults and teenagers might suffer permanent spinal cord injury. Unlike some product recalls, however, the CPSC did not take action to take it off the market entirely. The reason, according to a spokesperson, was that it was a product for children, and children were not getting hurt on it—only adults were.

In 1994, attorney Matthew Rinaldi told The Seattle Times that accurate injury numbers were hard to come by because previous settlements may have included agreements not to discuss the case. Rinaldi represented a man in California who became a quadriplegic as a result of the slide. In preparation for that case, he found two people who broke their necks in the 1970s, one of whom had died. He also found six adults who suffered broken necks in the 1980s and 1990s as well as one 8-year-old girl who suffered brain damage. In 1989, a consumer advocacy group known as the Consumer Affairs Committee of Americans for Democratic Action reported that 5000 people had gone to the hospital for slide-related injuries in 1988 alone.

 

In 1994, while the Slip 'N Slide was still dormant, Kransco sold Wham-O to Mattel. The company was sold again in 1997, this time to an investment group led by Charterhouse Group. In 2001, Wham-O brought out a revamped version of the Slip ‘N Slide with a longer path, water tunnels, and archways. The company said it was “perfectly safe” for anyone under the age of 11 to use.

A man stands up on a water slide
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Since that time, Wham-O has been sold twice more—first to Cornerstone Overseas Investments in 2005 and then to InterSport and Stallion Sport in 2015. The Slip ‘N Slide remains on sale with the standard cautions that it should only be used by kids, though that hasn’t prevented adults from trying it out. This time, they tend to post the results on YouTube.

"Officially, the box says under 12," Wham-O president Todd Richards told the Los Angeles Times in 2017. "Not everyone abides by that."

While the history of the Slip 'N Slide appears sensational, it's not unique in the realm of playthings that can prompt injury. Between 2002 and 2011, roughly 1 million people—most of them kids under the age of 16—wound up in the emergency room as a result of bouncing on a trampoline. A third of them suffered long bone fractures.

When used as directed, Slip 'N Slides can be a fun and safe diversion, though that still hasn't stopped the product from being stigmatized. In late 2018, another consumer watchdog group, World Against Toys Causing Harm, released their list of the most dangerous toys on the market. Among them: water balloon slingshots, backyard pools, and the Slip ‘N Slide.

The Long Stride of Tony Little, Infomercial Titan

Mike Coppola, Getty Images for MTV
Mike Coppola, Getty Images for MTV

Tony Little didn’t see it coming. It was 1983, and the aspiring bodybuilder and future Gazelle pitchman was living in Tampa Bay, Florida, winding down his training for the Mr. America competition that was coming up in just six weeks. While driving to the gym, Little stopped at a red light and waited. Suddenly, a school bus materialized on his left, plowing into Little's vehicle and crumpling his driver’s side door.

Dazed and running on adrenaline, Little got out and sprinted over to find the bus was full of children. After seeing that none of the kids were seriously hurt, he promptly passed out. When Little later awoke, he was in the hospital, where he was handed a laundry list of the injuries he had sustained. There were two herniated discs, a cracked vertebrae, a torn rotator cuff, and a dislocated knee. He struggled to maintain his physique in the weight room and made only a perfunctory appearance at that year's Mr. America competition. Little's dreams of becoming a professional bodybuilder had been derailed courtesy of an errant school bus, whose driver had been drunk.

Though it took some time, Little eventually overcame the setback, pivoting from his original goal of being a champion bodybuilder to becoming one of the most recognizable pitchmen in the history of televised advertising. Before he did that, however, he would have to recover from another car accident.

 

For someone so devoted to physical achievement, Little was constantly being undercut by obstacles. During a high school football game, Little—who was a star player on his team in Ohio—ended up tearing the cartilage in his knee after he collided with future NFL player Rob Lytle. From that point on, Little's knee popped out of place whenever he stepped onto the field or went to gym class.

Tony Little is photographed at the premiere of Vh1's 'Celebrity Paranormal Project' in Hollywood, California in 2006
John M. Heller, Getty Images

In There’s Always a Way, his 2009 autobiography, Little wrote about how that injury—and the loss of a potential athletic scholarship—caused him to act out. A friend of his stole a Firebird and took Little for a joyride. When they were caught, Little took the blame; as he was under 18, Little figured he would get by with a slap on the wrist, while his older friend might be tried and convicted of a serious crime as an adult. According to Little, the judge gave him a pass on the condition that he relocate to Tampa Bay, where he could live with his uncle and put some distance between himself and the negative influences in his life. Little agreed.

Because of his previous injury, Little was unable to play football after making the move to Florida; instead, he devoted himself to his new high school’s weight room, where a bad knee was not nearly as limiting. After graduating, he pursued bodybuilding, earning the titles of Junior Mr. America and Mr. Florida. Little envisioned a future where he would be a fitness personality, selling his own line of supplements when he wasn't competing professionally.

The school bus changed all that. Little, who was now unable to train at the level such serious competition required, retreated to his condo, where he said he relied on painkillers to numb the physical and emotional pain of the accident. More misfortune followed: Little accidentally sat in a pool of chemicals at a friend’s manufacturing plant, suffering burns. He also had a bout with meningitis.

While Little was convalescing from this string of ailments and accidents, he saw Jane Fonda on television, trumpeting her line of workout videos. Little was intrigued: Maybe he didn’t need to have bodybuilding credentials to reach a wider audience. Maybe his enthusiastic approach to motivating people would be enough.

By now it was the mid-1980s, and a very good time to get into televised pitching. In 1984, President Ronald Reagan signed the Cable Communications Policy Act, which deregulated paid airtime for cable networks. Herbalife was the first to sign up, airing an infomercial for their line of nutritional products. Soon, stations were broadcasting all kinds of paid programs. Exercise advice and equipment pitches were abundant, a kind of throwback to department stores that used to feature product demonstrations. It was not enough to read about a Soloflex, which used resistance bands to strengthen muscles. It was better to see it in action.

Now that he was back in shape, Little was ready to make his mark. He was told by his local cable access channel that he could buy 15 half-hours of airtime for $5500. To raise the money, Little started a cleaning service for gyms and health clubs. After airing installments of an exercise program, he was picked up by the Home Shopping Network (HSN). Little made his HSN debut in 1987. With his energetic pitch and trademark ponytail, he sold 400 workout videos in four hours.

 

Little was on the home-shopping and infomercial circuit for years before landing his breakthrough project. In 1996, the Ohio-based company Fitness Quest was preparing to launch their Gazelle, an elliptical trainer that could raise the heart rate without any impact on joints. People used their hands and feet to move in a long stride that felt effortless.

Little felt he would be the perfect spokesperson for the Gazelle and entered into an arrangement with Bob Schnabel, the company's president. The night before the infomercial was scheduled to shoot, Little was driving when he got into another serious car accident that required 200 stitches in his face. Little called Schnabel to break the news, and was told he’d have to be replaced.

Tony Little demonstrates a Gazelle during an MTV upfront presentation in New York in 2016
Mike Coppola, Getty Images for MTV

Undaunted, Little flew from Florida to Ohio to speak to Schnabel in person. By insisting that he could make the story inspirational (and that he could cover up his injuries with make-up), Little managed to convince Schnabel to proceed with the infomercial as planned. The Gazelle ended up with $1.5 billion in revenue, with Little’s other ventures—Cheeks sandals, bison meat, and a therapeutic pillow—bringing the total sales of his endorsed products to more than $3 billion. Little later reprised his Gazelle pitch for a Geico commercial, which also served as a stealth ad for the machine—which is still on the market.

While pitching wound up being relatively low-impact, it was not completely without problems. Little once said that the accumulation of appearances—more than 10,000 in all—has done some damage to his neck because of constantly having to swivel his head between the camera and the model demonstrating his product.

Those appearances have made Little synonymous with the machine. In 2013, the Smithsonian's National Zoo wondered what to name their new baby gazelle. The answer: Little Tony.

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