The Coca-Cola Co. says its net income slipped in the second quarter from a year ago, as rising costs for ingredients offset its expansion overseas.
The world's biggest beverage maker said revenue growth was powered by emerging markets such as India, where volume rose 20%.
But that was offset by higher costs for ingredients, which rose 5% from a year ago, and weakness in Europe. Several regions there suffered from economic uncertainty and poor weather, and sales volume fell 4%.
In the US, the company said sales volume rose 1%, while a mix of higher prices and a variety of smaller bottles and cans helped lift revenue 5%. However, volume for its flagship sparkling beverages - sodas such as Coke and Sprite - fell 2%.
As soda consumption in the US continues to decline, Coca-Cola has increasingly been looking past its namesake drink for growth. The company said volume of its still beverages, such as Powerade and Smartwater, rose 8% in the quarter. Its juice brands rose 3%, driven by growth in its lower-calorie Minute Maid offerings.
Given the saturated US market, Coca-Cola is also increasingly pinning its fortunes on international markets, where the ranks of middle-class consumers are multiplying rapidly.
In the US, Coca-Cola estimates that the per capita consumption of its drinks on average is more than one 8-ounce serving a day. By contrast, consumers in India drink an average of just 12 servings over an entire year.
As a result, Coca-Cola is racing to establish an early dominance in foreign markets. Last month, for example, the company said it would accelerate its investment in India to $5 billion over the next eight years. That's more than double the $2 billion it invested since re-entering the country in 1993.
For the three months ended June 29, the company said it earned $2.79 billion, or $1.21 per share. That's down from $2.8 billion, or $1.20 per share, in the year-ago period, when there were more outstanding shares.
Not including one-time items, the company said it earned $1.22 per share. Revenue rose 3% to $13.09 billion. Analysts polled by FactSet on average expected earnings of $1.19 per share on revenue of $12.89 billion.
Shares of Coca-Cola rose 80 cents to $77.28 in pre-market trading.
Earlier in July, Coca-Cola shareholders approved a 2-for-1 stock split, the company's first in 16 years.