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Coca-Cola (KO) stock jumped 6% on Tuesday after the company beat Wall Street’s earnings expectations as consumers gravitated toward low-calorie drinks and mini cans.
The beverage giant seemed to have cracked the code on consumers becoming more health- and cost-conscious. Global unit case volume was up 3%, more than the 1% Wall Street expected, per Bloomberg consensus data. In North America, volume grew 4%.
Coca-Cola Zero Sugar largely drove those gains, with volume up 13%, while trademark Coca-Cola was up 2%, sparkling soft drinks were up 2%, and sparkling flavors rose 3%.
“We’re seeing a big uptick in low-calorie, zero-calorie Coca-Cola,” CFO John Murphy told Yahoo Finance on Tuesday. “Coke Zero has been on a tear, really, for some time now. … It’s by far and away our best innovation, I’d say, over the last 25 years.”
Murphy said the adoption of GLP-1 weight-loss drugs is just one factor driving the demand, coinciding with a broader movement among consumers toward lower-calorie products. “We’ve developed a pretty compelling pipeline [for that],” Murphy said.
Murphy also underscored the uneven economic environment, adding that the business has seen some signs that consumers are under pressure.
Last quarter, the company launched single-serve mini cans in convenience stores and gas stations across North America, which grew volume for that can size by high single digits.
“Value is more top of mind than it was, say, a couple of years ago,” Murphy said. “Being able to innovate with different pack sizes, different price points, depending on the channel, depending on the geography, we know that playbook works, and it’s a matter of being able to execute it at scale over time.”
However, some consumers are still willing to splurge on higher-priced drinks like Fairlife. Murphy called its 2020 Fairlife acquisition a “home run” for the business, adding that “meeting demand is the biggest challenge.”
The company is expected to open a Fairlife production facility this year in Webster, N.Y., and recently announced another $650 million investment to launch a facility in Coopersville, Mich., with the goal of opening it in 2028.
Coca-Cola now expects adjusted earnings to grow 8% to 9% in 2026, up from its previous expectation of 7% to 8% growth, which Murphy attributed to changes in its tax rate.
When asked if transportation costs for the year are up because of higher energy prices stemming from the war in Iran, Murphy said, “not so much” in the first quarter. He added that the company is “looking closely at how things play out for the rest of the year and adjusting appropriately.”