Coca-Cola’s Results Beat Expectations as Zero-Sugar Drinks and Smaller Packs Drive Sales

Coca-Cola (KO.N) posted third-quarter results that exceeded Wall Street expectations, driven by strong demand for its zero-sugar beverages, Fairlife dairy products in the U.S., and its soda lineup in several international markets — even as global consumer spending remained under pressure.

The company maintained its full-year sales and profit targets, with CEO James Quincey acknowledging the challenging environment. Shares rose 3% on Tuesday following the report.

CFO John Murphy told Reuters, “Affordability and value truly matter — we understand that. It’s important that we find the right package at the right price to keep our customers within our base.”

In a bid to appeal to budget-conscious consumers, Coca-Cola — which plans to launch its cane sugar trademark soda in the U.S. this fall — is introducing mini 7.5-ounce single-serve cans priced under $2 in American convenience stores.

Murphy added that the cane sugar Coke, which will be sold in glass bottles in the U.S., will roll out gradually through late 2025 and 2026. He told Bloomberg that limited cane sugar supply and restricted glass bottling capacity had slowed production expansion.

To attract higher-income customers, Coca-Cola has been ramping up Fairlife milk production in the U.S. while investing in premium zero-sugar beverages and energy drinks such as Powerade.

“Coca-Cola continues to demonstrate strong pricing power and has successfully passed higher costs on to consumers,” said Mark Vickery, Senior Market Analyst at Zacks Investment Research.

However, company executives cautioned during the earnings call that intensifying local competition in markets such as India and China poses new challenges.

“It’s not just a matter of affordability,” said Quincey. “We’re also seeing a deeper cultural shift toward more locally preferred products.”

Unit volumes increased in Europe, the Middle East, and Africa, remained flat in Latin and North America, and declined about 1% in the Asia-Pacific region during the quarter.

Murphy noted that growing demand for low-calorie products has begun to impact sales of its flagship Coca-Cola beverage.

Health consciousness among U.S. consumers has surged — partly influenced by the rising use of weight-loss drugs and the “Make America Healthy Again” movement launched under former President Donald Trump’s administration.

Recovering from a Boycott
Murphy said demand for Coca-Cola’s trademark beverage has also been rebounding from the “significant impact” of a boycott triggered by a viral video alleging the company had fired Latino employees and reported them to U.S. Immigration and Customs Enforcement (ICE).

Reuters reported in February that there was no public evidence to support claims the company had reported migrant workers to ICE.

“This year has certainly been more challenging than we expected — and likely more difficult than the Hispanic community had anticipated as well,” Murphy added.

According to data compiled by LSEG, the world’s largest beverage company reported third-quarter revenue of $12.46 billion, surpassing analyst estimates of $12.39 billion.

Like its rival PepsiCo (PEP.O), Coca-Cola expects to benefit from a weaker U.S. dollar, which should bolster both revenue and profit.

Earlier this month, PepsiCo also beat quarterly forecasts thanks to strong international growth and demand for healthier drinks, while doubling down on smaller, lower-priced packs for its popular salty snacks.

In the third quarter, Coca-Cola reported a 1% increase in volume, reversing the previous quarter’s 1% decline, while prices rose 6%. Excluding special items, the company earned 82 cents per share, topping the expected 78 cents, as higher pricing helped boost margins.