How Pepsi Caused Riots in the Philippines (Advertising Fail)

hey everyone this is chris guerin this episode marks the first of our brand disaster series where i talk about incidents in history where brands go through a major [ __ ] up the type that makes you go what the hell were they thinking first on the list involves pepsi and the one time where they [ __ ] up so bad that they caused riots in the philippines so this happened around 1992 and the setting was the philippines coca-cola entered the philippines in 1912 and was the first mover in the country and pepsi on the other hand entered in 1989 and unsurprisingly coca-cola dominated the soda market with a commanding 75 percent market share whereas pepsi was at around percent and so pepsi philippines thought you know what we need to do something about this something big especially since pepsi leadership was pretty determined to bring coca-cola to its knees in fact pepsi cola's then international ceo christopher sinclair who was the brand's youngest ceo of 38 garnered the reputation of being a battlefield commander and he was confident that he would be able to rip coca-cola a new one and so they brought in dg consultors an advertising agency from mexico to work on this the agency came up with a promotional campaign called number fever basically they print a number combination under each bottle cap and they would regularly announce winners on air pepsi was pretty smug and confident about this because it worked in the u.s the mission was to roll out the number fever campaign to argentina chile guatemala mexico and the philippines so let's focus on the philippines because this is where the disaster happens ideally the plan was to print three digits under each bottle cap and every day pepsi would air a mini show on cable tv where they would announce the winning numbers of the day and people could win as low as 100 pesos around 2 us dollars to as high as 1 million pesos or over 20 000 us dollars an algorithm was made to randomize the numbers that will be printed on each bottle cap to make sure that cash prizes would not exceed their budget of around 2 million us dollars for the entire promotional campaign and initially the promo did really well i mean can you imagine the brand exposure that pepsi was getting for this people were buying so many bottles of pepsi and would be glued to their tv screens every day because a winner would be announced and that winner could be them and honestly i don't blame them i mean you're telling me that i could win a million pesos just by quote-unquote investing in a bottle of pepsi for what 20-25 pesos it's a no-brainer and man did this campaign really work for pepsi initially it brought their market share from four percent to almost 25 percent and increased sales by up to 40 percent in how long what three months and you know what coca-cola was actually getting worried and pepsi philippines president was feeling pretty smug saying that the marketing campaign was being dubbed as the most successful marketing promotion in the world and i don't think he was wrong though because 70 percent of the philippines population was paying attention to pepsi every day for three months so yeah it was a success up until disaster happened so remember the algorithm the algorithm that was supposed to make sure that there would be lots of winners of the smaller cash prizes and one grand prize winner before the promo was run 3-4-9 was selected as the winning number and so pepsi they handed dg consultorius the ad agency a list of numbers that should not be printed because this would be reserved for the solo grand prize winner that number was 3 4 9 because once again there should only be one grand prize winner but then oh boy so the final day comes and everyone is glued to the tv screen and then it's announced that whoever has the bottle cap with the number 349 was the grand prize winner the problem was 349 was not only printed on one bottle cap it wasn't printed on two bottle caps nope it wasn't even printed on 10. it was printed on 800 000 bottle caps and so for a moment 800 000 filipinos experienced peak happiness i'm just imagining god in his office in heaven and his ipad notifies him that there's an 800 000 surge in happiness in the philippines of all places but then since god sees the future he's like oh boy this isn't gonna end well and sadly guys it really doesn't end well for these people who momentarily probably feel that their lives have been fixed at least financially in their happiness level it it really does take a nose to die from here on out because the following day all the winners start marching to the pepsi offices and factories to claim their prize and of course pepsi starts noticing that crowds are gathering and they realize uh-oh all these people have the winning numbers but then pepsi starts turning each of them away telling them that there was an error and unsurprisingly people are realizing how unfair this is to them but then again guys just run the numbers theoretically if pepsi did actually pay all eight hundred thousand winners what is due to them which is a million pesos each or around 20 000 us dollars each that would amount to around 16 billion us dollars and a source i've read stated that it could actually go up to 32 billion dollars and i get it pepsi is a big company but 32 billion dollars is enough to [ __ ] a company even as big as pepsi one source even mentioned that 32 billion dollars was half the gdp of the philippines at that time now when it became pretty clear that they were in deep pepsi executives were trying to contact pepsi international ceo christopher sinclair remember that guy mr battlefield commander guy who was pretty cocky and confident about beating coca-cola well they couldn't reach him because he was in his yacht and during the annual gathering of pepsi bottlers eventually all pepsi top executives got on an emergency meeting at 3am and they decided that they would stand their ground and instead offered to pay each winner around 500 pesos which is a far cry from the 1 million the winners were expecting to receive but even with a 500 peso offer to all 800 000 winners this would have brought pepsi's entire promotional budget from their initial 2 million dollars to 8 million dollars which is pretty huge but manageable compared to the 32 billion and unsurprisingly people were not at all thrilled about this offer but then a lot of them actually did get the 500 pesos and pepsi ended up giving away around 12 million pesos in total but then that didn't really do anything for the rest of the group who didn't take the cash offer this group united and formed what they called as the 349 alliance and then the violence began crowds outside began hurling rocks at the pepsi building and it came to a point when pepsi had to bring in armed guards who then set up fences with barbed wire around pepsi offices death threats were sent to pepsi executives and the group started attacking everything that was associated with pepsi and one of the easiest targets were pepsi trucks a total of 37 pepsi trucks were pushed over stoned or burned and sadly people actually got hurt and there were fatalities in a pepsi plant in davao a grenade was lost and it killed three employees and in another incident some idiot threw a grenade to a pepsi truck but instead it rolled further killing a teacher and a student and injuring several other people it came to a point when pepsi executives hired their own bodyguards and started sending armed guards along with their delivery trucks and there's even this one woman whose husband who i'm guessing was one of the winners died of a heart attack while he was marching with protesters his wife then vowed that she will continue fighting and that if she dies here her ghost would continue to haunt pepsi well good for her she didn't have to do any of this because as all of this was happening pepsi's market share took a nosedive and coca-cola outsold pepsi 3-1 in the philippines after the sustained negative coverage of the disaster now after a couple of months there were around 10 000 claimants who filed for lawsuits demanding their prize money and all of this happened in 1992 but the final case was not closed until 2006 when the philippine supreme court finally ruled that pepsi had not been negligent and was not liable for damages it's a bit sad though that many if not all of the winners didn't get anything i mean okay sure it was an error on pepsi sport and they didn't really have to pay 1 million pesos each but something bigger than 500 pesos would have been good enough but you know what a couple of months after this whole thing when the news got tired of talking about this and when the rest of the country who aren't involved in this moved on pepsi sales it normalized it really does show the resilience of soda brands and i'm guessing that this confidence of being able to recover is one reason why pepsi didn't really care about whether they took it negatively or not as long as they didn't have to pay and about mr battlefield commander pepsi ceo well he was even promoted to becoming the ceo and chairman of both international and north american operations but then he resigned months later fortune stated that it was a voluntary but ungraceful exit and how convenient it is for him to leave because someone else needed to clean up his mess the promo campaign that was once dubbed as the best in the world is now considered as a brand catastrophe and is actually part of a lot of case studies i'm just really surprised that not more filipinos know about this i am filipino and i only knew about this days ago and when i told some friends they had no idea either pepsi [ __ ] up so bad and yet we had no idea it ever happened but now you know how they dealt with that disaster and i like studying these disasters because we get to see who's good and who's bad because brands brands can mess up they can make mistakes but it's how they make amends for those mistakes where we get to see who they really are but yeah that's pretty much all there is about the pepsi number fever disaster i hope you enjoyed this episode because i really enjoyed making this and if you did enjoy it don't forget to tell your friends about brand origins as i keep mentioning we're still very small so every like every share and every subscription it really means a lot to us if you prefer the podcast version of this episode just search for brand origins on spotify and if you want to say hi we're also on facebook and twitter this is chris guerin and i'll catch you again next time for another episode of grand origins you

Channel: Brand Origins

Views: 3,619

Rating: 4.7530866 out of 5

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Id: KVwX5k5f1XE

Length: 11min 49sec (709 seconds)

Published: Fri Aug 21 2020