The Cola Contest With 600,000 Winners

It was the largest prize available that published odds of winning that amount, where twenty eight point eight million to one. Number Fever was such a success that Pepsi began to challenge Coca Cola's long time dominance. Monthly sales were jumping to fourteen million dollars from ten million dollars, market share was growing to from nineteen percent, and then the winning

number was announced three hundred forty nine. What ensued was perhaps the deadliest marketing disaster in history, and it remains one of the business world's great cautionary tales. And error at a bottling plan led to six hundred thousand winners, not to mention lawsuits, riding, and even deaths. The Coola

contest with six hundred thousand winners decades ago. Pepsi's number of fever promotion captivated consumers and promised to end Coke's dominance in the Philippines, but an error at a bottling plant led to disaster. By Jeff Maisch. Marily So, a woman in her early fifties with graying hair, runs a Sorry Sorry store out of her one room home in a concrete building beside a railway track in Manila. In the steamy heat of a summer afternoon, Shirtless children appear

at her window clutching coins. With a kind smile, she serves them warm bottles of water and Royal True, one of a few sodas she displays, alongside tiny shampoo, seshets and single cigarettes. There's one brand she refuses to sell. If someone asks for a Pepsi, her expression sours. For more than twenty eight years, she's nurtured bitter resentment against the company. I didn't have a job back then, she says,

starting in on her Pepsi story. It was six pm on ma and So was among the seventy of Filipinos watching the Channel two evening news. Then twenty three, she was living in a wooden shack beside the tracks with four children under five. Pepsi was about to announce the winning number in a promotion that had gripped the Philippines

sixty five million people. Her husband, a house painter, had spent their last centavos on special number fever bottles of Pepsi, hoping one of the three digit numbers printed on the underside of the caps would match one of the winning numbers locked inside a vault. Across the Philippines seven thousand, six hundred and forty one islands. Ads had promised people

you could be a millionaire. A million pesos worth about sixty eight thousand dollars today was the largest prize available, six hundred and eleven times the country his average monthly salary at the time. The published odds of winning that amount were twenty eight point eight million to one, but Pepsi had already minted eighteen millionaires. They appeared in its ads. Realist A one. A bus driver named Nema Balmas became known as Mrs Pepsi after joking that drinking cola put

her husband in the mood. Number of Fever was the brainchild of an executive named Pedro Virgara, a Chilean who worked for the promotions department in New York. After a successful US rollout, Pepsi Coli International Chief Executive Officer Christopher Sinclair made it part of his strategy to fight Coca Cola abroad. Since becoming the global arms youngest CEO at thirty eight, Sinclair had developed a reputation as a battlefield commander,

visiting seventies seven countries in six months. He was dismayed to find the world's grocery aisles awash with Coca cola red as Fortune put it. Pepsi hired a Mexican company, d G Consultaures to bring Number Fever to Argentina, Chile, Guatemala, Mexico, and the Philippines, where it truly caught fire. Monthly sales there quickly jumped from ten million dollars to fourteen million dollars, and its market share from nineteen point four percent to

twenty four point nine. Bottling plants roared twenty hours a day, doubling their usual production. An aggressive ad campaign dominated the media, with twenty nine radio stations and four newspapers circulating the winning numbers. The promotion, initially scheduled to end on May eighth, was extended five weeks. By then, number fever was verging on number hysteria. Cops jailed a maid accused of stealing her employer's winning crown. As the bottle caps were known.

Two Pepsi sales people were murdered following a dispute over another crown. The night of May, so murmured a prayer as the blue of the television shown her children's eyes. When Pepsi announced the winning number, her husband is Sagani, r fold through their crowns and found the one three forty nine, a million paceos. Her prayer had been answered. The couple danced and laughed until the TV started to rattle in a passing freight train drowned out their shrieks

of joy. Five miles across town, Ernesto did Guzman Dalima, a tricycle taxi driver, was dashing downstairs to tell his nephew, Simon Marcello that his three forty nine crown had just won him fifty thousand paceos. Marcello was already celebrating he had a three forty nine worth a hundred thousand paceos, enough to quit his job as a cocktail waiter in the city's red light district. Similar scenes were playing out across the country. A bus driver had three one million

paso three forty nine. A mother of twelve whose children went through ten bottles of Pepsi a day had won thirty five million paceos. Winners raced to the iron gates of Pepsi's bottling factory in Quezon City, just northeast of Manila to claim their prizes. As the crowd grew, a

secretary die out. The marketing director Rosemarie Vera. There seems to be many three crowns in circulation among people I know, the secretary said, According to an account in the Philippine Daily Inquirer, at ten PM, someone from the company telephoned the Philippine Department of Trade and Industry and said a mistake had been made. Within a year, a violent consumer uprising would be underway, with riots and grenade attacks, leaving

dozens injured and five dead. It was perhaps the deadliest marketing disaster in history and remains one of the business world's great cautionary tales. I don't think that from the onset people would look at this and say people could actually die, says Lee Auster, a University of Idaho professor and the co author of a risk management textbook that

included number fever as a case study. But even then, like the nuclear power industry or aviation, people have to be on top of things and realize that catastrophic events that can happen at the end. In response to a request for comment on the events described in this story,

Pepsi said it would be unable to verify them. These events took place almost thirty years ago, and none of the executives familiar with this programer at PepsiCo anymore, and given that the Philippines is just emerging from one of the world's longest COVID lockdowns, we have been unable to access stored records on this matter, the company wrote, but it said we deeply regret any pain and suffering our

mistake caused the people of the Philippines. America dominates many aspects of Filipino life, from the kaleidoscope of beverages and most sorry Sorry stores to a fondness for swing dancing and apple pie. The US took control of the islands from Spain in eight after defeating the country's revolutionary government in a vicious three year war. It established military bases and colonial rule, and its influence remained long after independence.

In the US, interfered in presidential elections, tacitly supported Ferdinand Marcos during his brutal two decades of rule, and generally used the country as proxy turf for the Cold War, sometimes in bizarre ways. At one point, the CIA helped suppress a communist peasant rebellion by faking vampire attacks to scare superstitious guerrillas into leaving their positions. Two American companies also used the Philippines for a different kind of proxy war.

PepsiCo and Coca Cola duked it out there in ways that would never have been allowed in the US, employing espionage and other dirty tricks. At one point, during the Marco Sarah, Pepsi executives were caught cooking the books to show higher sales than Coke, forcing a ninety million dollar right off. Coke kept the upper hand mainly by undercutting

Pepsi's prices. By it had expanded its share of the cola market to so high that it no longer bothered to advertise number of fever hit Coke like a sucker punch. Rodolpho Salazar, president of Pepsicola Product Philippines, boasted that half the country's population was participating, making it the most successful

marketing promotion in the world. As Pepsi's sales jumped, Coke executives scrambled unsuccessfully to devise their own promotional game, even recalls Barbara Gonzalez, Coke's former corporate communications director in the Philippines, buying a whole truck of bottles to find out what is the ratio of what we call the seating the

winning crown to the non winning. Coke's Filipino president Jesus King King Seldran, a World War Two hero who sometimes showed up at bottling factories in a tank, publicly admitted he was concerned. There was reason to be skeptical, though that the promotion would end as a clear win for Pepsi. During the rollout in Chile earlier that year, a garbled facts had led a wrong number to be announced, triggering riots, and swindlers in the Philippines were creating fake winning crowns,

leading people to claim they'd been wrongly denied prizes. Even before the three fort nine. Error emerged when disaster struck on. Pepsi initially tried to change the winning number. Newspapers reported the next morning that the real number was one thirty four, only adding to the confusion, the company locked the factory gates in Quezon City, and by mid morning policemen and soldiers were wrestling with three forty nine holders who were

lobbing rocks at the building. Executives inside, we're trying to phone headquarters in New York, but Sinclair was unreachable, schmoozing on a yacht at an annual gathering of bottlers, according to a report in Asia Week magazine. Sinclair declined to comment for this story. Protests carried on through the next night. At three am, Pepsi decided it would pay three forty nine holders who came forward over the following two weeks,

a goodwill gesture of five paces. Executives calculated that if half the six thousand crowns that had been minted with the number three forty nine were cashed in, the damage would be contained at six million dollars. Among those assembled outside the factory was Vicente del Fierro Jr. An advertising

consultant and a preacher for a charismatic Catholic sect. Del Fierro had called the promotion a social disease that nurtures the gambling instinct in our children in an open letter to a newspaper, but despite his opposition, his daughter Simbelle held a winning crown. He later wrote that he saw security guards tossing glass soda bottles at the crowd, and that a policeman charged at him with a riot shield. He took cover at a nearby Duncan donuts, jammed with

agitated winners. Outside, Pepsi trucks rumbled past, flanked by guards carrying automatic weapons. A manager tried to escape the factory, but protesters threw stones at him. A bomb threat would follow. Hours later, Del Fierro stood on a table at the donut shop and demanded quiet. Then he asked for volunteers to draw up a list of winners names. As reporters gathered around, he announced a crusade, aid it's about Third

world countries being exploited by multinationals. He said many three forty nine holders took up Pepsi's offer of five pesos for their crowns. In the first two days, the company paid out more than twelve and a half million pesos. The final bill ended up close to ten million dollars. According to Asia Week, It didn't take long for Pepsi to trace the source of the error. Three forty nine designated a non winner in the original promotion had been

mistakenly chosen as a winner for the contest extension. The company reported that crowns from the extension had been printed with a different seven digit security code, and that none of these would be honored. The explanation didn't appease the protesters, as del Fierro rallied support for his campaign, which he called Coalition three forty nine. He got an early boost from an unlikely source, Celdron Coke's local CEO, who instructed an employee to offer del Fierro ten thousand pesos start

up money. According to the now former staffer, who spoke on condition of anonymity, can I have a megaphone? The employee recalls del Fierro asking when the contribution arrived. Sel Dron passed away in Coke didn't respond to emailed requests for comment. Coalition three forty nine organized rallies outside Pepsi plants, where del Fierro would yell into his new p A system. He also started preparing a lawsuit he hoped would win

class action status, promising crown holders a huge settlement. He accepted five pesos for legal fees from those who could afford it, and worked pro bono for those who couldn't. De Guzman Dalina, the Manila taxi driver, arrived with his nephew at del Fierro's house one night, not long after the draw, to find three forty nine holders lined up around the block. Inside. Del Fierro's wife, Nori, a glamorous

cookbook author, was making food for the crowd. Del Fierro said he'd take the fight all the way to New York, a city he knew mainly from Frank Sinatra songs. We are committed to pursue this crusade until the very end, he wrote in a letter to the Manila Chronicle. God is definitely bigger than the fiftieth largest corporation in the world. When the story hit international papers, Kenneth Ross, PepsiCo International's

primary spokesman, portrayed the activists as opportunists. Quick buck artists have lured thousands of unwinning Filipinos with very empty promises of a huge settlement for the payment of an upfront fee. He told the associated press. Groups with names such as United three forty nine and Solid three forty nine actually were charging fees, with some asking as much as a thousand pesos for membership. Maralissa and her husband signed up with the preacher brother Bambi Santos, who said God had

called him to fight Pepsi. They agreed to pay him thirty of any future settlements and joined his rallies and protests in the provinces. Farmers were reported to be selling their cattle to afford the ernie to Manila, and the chaos continued. Protesters in Quezon City burned tires, Speculators offered wads of cash for three forty nine in hopes of a bigger payoff later. Even police weren't immune to the frenzy.

One National Bureau of Investigation officer arrived at the Kaezon City plant with an empty attache case to carry home his million pasos. Pepsi either pays, he told a reporter, or they closed down. As days turned into weeks and then months, some ten thousand claimants filed suits demanding money. Molotov cocktails crashed into Pepsi factories and dozens of delivery trucks, their drivers dousing the flames with seven Up. The Pepsi Coola hot Shots basketball team changed its name to the

Seven Up on. Kola's executives began traveling with bodyguards, and the company moved American employees out of the country, save for one who had worked in Beirut. We were eating death threats for breakfast Vera, the marketing direct later told a reporter At a riot in Manila, a sixty four year old protester named Passiencia Salem, whose husband had died of heart failure during March, told a journalist, even if I die here, my ghost will come to fight Pepsi.

Why had the contest sparked such anger. It was the money, of course, but it wasn't only that. The scandal tapped into rising anti colonial sentiment in the Philippines, which was then flaring over the American military presence. Following fraud failed negotiations, the US was withdrawing from the last of its six bases. The closures were a victory for nationalists, but they came at the cost of hundreds of millions of dollars in

yearly aid and tens of thousands of jobs. Number fever also became linked in the public imagination with the country's chaotic national elections, which had taken place a few weeks earlier. But we're still unresolved thanks to counting delays and procedural

and legal challenges. The presidential test in particular, had had colonial overtones, pitting Fidel Ramos, a cigar chomping, right leaning West point graduate with Pentagon connections, against Miriam defense Or Santiago, a US educated lawyer who had worked overseas for the United Nations, and Edward Kawango, chairman of San miguel a Coca Cola partner. Other candidates included mL de Marco's widow

of Ferdinand. One must wonder how many voters were drawn from the voting booth to PEPSI protests, a columnist wrote. In the end, Ramos narrowly defeated Santiago, a result marred by evidence of fraud. In January, PEPSI had to pay a fine of one fifty thousand pesos to the Department of Trade and Industry for deviating from the promotional campaign the government had approved. We have done everything that we

think is reasonable to amically conclude this issue. Ross told the Los Angeles Times at this point, we do not intend to lay out additional money. Del Fierro mean while had hired five employees to process new lawsuit claimants, he eventually signed up about eight hundred in all, and was looking for US lawyers to bring the fight to New York. His daughter, sim Belle had taken over his advertising business.

One morning in February, a schoolteacher named Anisetta Rosario made her way to a Sari Sari store in Manila to buy rice. As she reached the market, a Pepsi delivery truck arrived. Someone through a homemade bomb that bounced off the truck and detonated. The blast killed Rosario and a five year old girls standing nearby. Five others were injured. Rosario's eldest daughter, Cindy, still recalls the shock of seeing her mother's lower half covered. At the funeral, they told

me her legs were shattered, she says. Rosario's widower, Raoul, didn't speak for days after his wife's death. A slight man who never remarried, he tells me in a whisper that Pepsi invited him to an office where a group of men in polo shirts with corporate logos offered him fifty thousand pesos about thirty four hundred dollars today, not to sue. My wife wouldn't have died, he says. He shouted in reply, it's because of the three forty nine incident,

because you cheated the people. He stormed out, but not long afterward, on the advice of friends, he changed his mind and took the money. In early April, Sinclair, the Pepsi International CEO, flew to Manila for an emergency meeting with President Ramos. A Ramos aide told the Los Angeles Times that Sinclair pleaded for help, warning that the incident could scare away much needed foreign investment. Ramos disagreed. It's

a special kind of case, Ramos told the Times. The following month, a grenade tossed into a Pepsi plant in Devou City killed three employees. The company urged the NBI to open an investigation into the attacks. A witness to several riots, no Mere Palacios, came forward with a list of six leaders of anti Pepsi coalition who he claimed were masterminding the violence. To force the company to pay. In late July, del Fierro and his wife boarded a flight to New York, armed with the findings of a

Philippine Senate report whose legitimacy Pepsi contested. It called the company guilty of gross negligence and misleading or deceptive advertising. As del fierro strode through Manhattan. He later wrote, sinatras New York, New York played in his head a kind of personal battle him. He hired two American consumer lawyers to sue Pepsi for four million dollars in actual damages and one million dollars in moral and exemplary damages. This problem will become a serious threat to the very existence

of PepsiCo, he told reporters. Massive negative public reaction will create a very deep wound which may be very difficult to heal. Pepsi was in the midst of an annus horribilist in the US. Dozens of people were claiming they'd found syringes inside it's cans, a tempering crisis the FBI

would later expose as a hoax. Crystal Pepsi, a colorless version of the soda, was selling miserably, soon to become one of history's great product failures, and a world tour by long time spokesman Michael Jackson was about to be derailed by accusations of child molestation, with Jackson canceling dates and saying that he'd become addicted to painkillers first prescribed after his hair caught fire during a Pepsi commercial shoot. Del Fierro showed up at a Pepsi building in upstate

New York, where Ross met with him. He warned the spokesman that he'd stay in New York until they reached a settlement. Ross said the violence had to end first. We don't have any control over the violence. Del Fierro replied. He returned to Manila empty handed. Later that year, the NBI alleged that a trio of thugs dubbed the Three

Kings was behind the anti Pepsi bombings. Initially, one of the men, a garment factory worker named RhoD Elio Formento, said he'd volunteered for a three forty nine group and been recruited by the other two during a clandestine lunch. According to documents obtained by Bloomberg Business Week from the NBI, he told investigators that a PEPSI security officer was present at the meeting and that the company had paid the three Kings to cause violence at rallies in an effort

to frame protest organizers. Fomento also said they'd been hired to cause a rift among the various movements leaders. If we were successful in our mission, PEPSI would give us a huge amount, he claimed, but Fermento's conscience nagged at him. Many got hurt and died. He told investigators, I was so guilty and I could not take it anymore, so I decided to reveal the truth. Fermento couldn't be located

for comment. A lawyer for PEPSI dismissed the police report, but the head of the NBA's Anti Organized Crime division told the media, we've been had. The People's Journal soon ran a story headlined PEPSI goons ombed own trucks. In February, the company lost a three court case. A twenty one year old medical student named Joel roquet one a lower court verdict in Bulah Khan, north of Manila, ordering PEPSI to pay him more than one million pasos. The company appealed,

but it's unclear whether it succeeded. That spring, Delphierro suffered a serious stroke. He recovered well enough that in the fall, when the Philippine Supreme Court issued a rest warrants for nine local Pepsi executives, he posed for a celebratory photograph holding a newspaper with the headline arrest of nine Pepsi executives. Okayed.

There's no record that the warrants were executed. The company sued him for libel, saying he'd been circulating pamphlets calling number fever a scam and had falsely claimed Pepsi had him illegally detained. Soon afterward, another stroke almost killed him. From his hospital bed, he labored over paperwork, dragging himself into court when necessary. Pepsi, they killing me softly. Sim Bell recalls him telling her he made her promise to

keep fighting the company even after he was gone. That November, hundreds of torch wielding three forty nine winners demonstrated near Manila's Malakanjang Palace during a state visit by U. S President Bill Clinton, yelling for his help and igniting a Pepsi bottle effigy stuffed with fireworks. Their hopes of American intervention were further dashed the following summer when a new York court dismissed del Fiero's lawsuit, saying it should be

heard in the Philippines. Sinclair was made c e O and chairman of Pepsi's combined international and North American operations in March nineteen ninety six, but he resigned four months later citing personal reasons. Sinclair departed voluntarily but ungracefully, Fortune wrote, leaving the overseas beverage mess for someone else to mop up. PEPSI had by then fallen back to also ranst at

Us Abroad, out sold by Coke three to one. In the Philippines, it was even overtaken by Cosmos, a local Coke owned brew marketing There had become all but impossible anytime anyone mentions anything to do with Pepsi. Frederick Dale, a local vice president with the company, told Deutsche Press agenteur somebody always digs up three forty nine to be three forty nine was slang for being duped. The protests eventually died out, but the lawsuits plotted along for years.

It wasn't until two thousand six that a Philippine court finally ruled PEPSI hadn't been negligent and wasn't liable for damages. At long last, the company's nightmare was over. This was not some little incident in a far off land that we didn't care about, says Ross, who left Pepsi in We cared deeply about what happened. We cared deeply about amicably resolving the matter to everyone's satisfaction. We certainly regretted the violence that surrounded this. In Nilah, marrily So had

by then moved on. Her husband died of a heart attack two years after the draw, sending her into emotional and financial despair. Storms flooded her shack, tarnishing her winning crown, and with four growing children to feed, she had no time to attend rallies. So one day she tossed the cap away. It was perseverance, she says, not luck, that led her to find a better home and start her Sorry Sary store. Today. Framed photographs of her children in

graduation caps and gowns hang on one wall. She tears up as she shows them off. Although del Fierro never won the settlement from Pepsi, he did squash the libel case against him, and he could claim some credit for helping pressure the government to strengthen its provisions on misleading and deceptive advertisements. After the three forty nine controversy, it started more closely monitoring promotional schemes and doubled its fines

against companies that violate consumer rights. Del Fierro died in January, following another stroke. Each night for months afterward, Simbel would boot up her father's computer to fulfill her promise to keep up the fight. She built a Coalition three forty nine website, uploading legal documents and press clippings. Inside a filing cabinet, she maintains an archive of thousands of winning crowns,

the rusting dreams of a generation. He guided me to do this, she says, so that PEPSI would never forget. With Barbara Resurrection and Nicole and Rabita, thanks so much for listening to one of this week's feature stories. It's definitely a sobering tale. That story and many more can be found in the magazine this week. The magazine is on newsstands, It's on the Bloomberg Terminal, and of course always at Bloomberg dot com. I'm Carol Masser and I'm

Jason Kelly. Check out our daily Bloomberg Business Week radio show vetters every weekday, starting at two pm Wall Street Time. This is Bloomberg