In Philippines, they got wrong one, baby


MANILA, Philippines -- 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 JTC screamed, "We are a millionaire!"

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 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, set afire 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 Feb. 13 bounced off and killed a schoolteacher and a 5-year-old girl and wounded six other people.

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 The company has withdrawn all but two expatriates, leaving an official in charge who has experience in Beirut, Lebanon.

Tailoring suits

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. The anti-Pepsi fever has brought together Communist rebels and army generals, well-dressed Manila matrons and barefoot rural peasants. All hold 349 caps.

Kenneth Ross, spokesman for Pepsi-Cola International, which owns 19 percent of the local bottling company, said the company's position was clear. "We will not be held hostage to extortion and terrorism," he said in a telephone interview from Purchase, N.Y.

All-nighter decision

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," said Mr. Ross, who has repeatedly refused to explain how the bottle-cap mistake occurred. "At this point, we do not intend to lay out additional money."

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.

But Mr. Ramos told the Los Angeles 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.

Nothing like this

That it is. Pepsi has run similar promotions around the world, from Mexico to Singapore. A garbled fax led to a wrong number's being announced on TV in Chile last year, and that case is in the courts there. But only in the Philippines has the Pepsi generation taken up arms.

"We haven't had bombs thrown at our offices anywhere else," Mr. 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 Mr. Marcos' rule, Pepsi led the huge market -- but at huge cost. Pepsi ultimately lost nearly $90 million in what Mr. 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 percent.

Elated by the success, officials added five more weeks to the initial 12 weeks of the advertising campaign. New ads read: "More chances to be a millionaire!"

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.

'Foolproof' system

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.

Thousands have joined anti-Pepsi organizations such as Coalition 349.

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.

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