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COLUMN ONE : Bottle Cap Flap Riles the Masses : After a Pepsi promotion went awry, thousands of Filipinos mistakenly thought they were in the money. Now the firm is trying to cool off protests that have united rebels, generals and matrons.

July 26, 1993|BOB DROGIN | TIMES STAFF WRITER

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," Ross said.

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.

More important, Pepsi President Christopher Sinclair flew to Manila in early April for an unannounced meeting with Philippine President Fidel V. Ramos. A Ramos aide said that Sinclair pleaded for help, warning that the fiasco could harm government efforts to lure much-needed foreign investment.

But Ramos told The 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.

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

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

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.

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.

Soon more winners began arriving in Manila on boats, buses and planes from across the archipelago.

The confusion--and violence--quickly escalated.

The anti-Pepsi crowds won support this month from Sen. Gloria Macapagal-Arroyo, head of the Senate's trade and commerce committee, which held hearings on the dispute. Pepsi was "grossly negligent," she said in an interview. "This was a travesty on the rights of consumers."

But the senator also voiced a common conspiracy theory here. A few dozen elite families control much of the economy, and their tactics are sometimes literally cutthroat. She fears that a rival family-owned bottler is behind anti-Pepsi violence. "I suspect a rival group is whipping up the trouble," she said.

Such suspicions, and the violence, say more about the Philippines than about Pepsi.

Still, it was a stunning slip-up for the company. Spokesman Ross repeatedly refused to explain how the mistake occurred. "This was a computer error," he said.

That's not good enough for cap-holders here. Thousands have joined anti-Pepsi organizations such as Coalition 349. The leader is Vicente Del Fierro Jr., a pudgy 45-year-old public relations consultant and lobbyist. Fierro holds a 1-million-peso bottle cap, but he insists that he took up the battle because "I would be remiss in my Christian obligations if I didn't help these people."

Fierro is well paid for his crusade. He said his group's 15,000 members each pay him from $14 to $80 in annual fees. They must also sign pledges to give him 10% of any money they may get from Pepsi. In exchange, Fierro prints anti-Pepsi tracts and ads, campaigns for a national boycott and plans to visit New York for a month to consult with lawyers about suing Pepsi there.

"I pity Pepsi, I really do," Fierro said, as he showed the poster-lined garage he has converted into his Pepsi war room. "I told Pepsi I'd like to offer my services as a PR consultant to help them rebuild their image after they have paid the claimants."

Such offers leave a sour taste for Pepsi. "We think it horrible that what I call questionable elements have seized this issue for what appears personal gain," Ross said.

Many Filipinos clearly do not agree. One Fierro fan, 64-year-old 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. "It is their mistake. Not our mistake. And now they won't pay. That's why we are fighting."

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