By Laura Cooper and Denny Jacob

Coca-Cola says that it can manage the effects of tariffs, but that lower sales to Hispanic consumers dented its sales in the U.S. and other markets including Mexico.

The beverage company posted a 3% volume drop in North America, as Coca-Cola carbonated soft-drinks volume declined in the latest eight weeks, according to an analyst report from RBC Capital Markets. Sales in Latin America -- a blockbuster market for Coke -- were flat this quarter, because of declines in places such as Mexico and Chile.

While several analysts called Coke's quarter a solid start to the year, some market softness stemmed from a pullback by Hispanic consumers, who might have been influenced by a social-media campaign against Coca-Cola. A video circulating online purported to show that the company called on Immigration and Customs Enforcement to help remove undocumented workers, which a company spokesman said is "unequivocally false."

"To the false video, I think that's largely in the rearview mirror in terms of its virality and affecting the business," Chief Executive James Quincey told analysts and investors Tuesday. "It wasn't the first piece of misinformation or disinformation or anything else nefarious about the Coca-Cola brand, and I am sure it won't be the last. But we are very focused on recovering from it."

Coke Chief Financial Officer John Murphy said in an interview that there was a "weakening with Hispanic consumers" at the end of the most recent quarter. Affordability issues throughout the company's customer base also hurt sales, he said.

To win back customers, Coca-Cola is focusing on local economic impact and being affordable through promotional pricing, Quincey said.

At the same time, the company kept its 2025 forecast and said it expects to be able to deal with tariff effects. Coca-Cola produces and bottles its sodas locally.

"We have seen both tailwinds and headwinds associated with being an American company," Murphy said. "It is something we feel that we've got a good playbook and have a lot of good practices across our markets to emphasize the localness."

Quincey said Coke isn't immune to tariffs, but the CEO added that the company will stick to its current pricing plans. Tariffs could affect orange juice and some equipment that the company might need to buy, but the impact would be small, he said.

Analysts said Coke had a solid start to the year, with strong organic revenue growth. The company reiterated its 2025 guidance, a win as many other companies are making downward revisions amid continued uncertainty. Shares of Coca-Cola were largely flat in midday trading on Tuesday.

Coca-Cola logged net income of $3.33 billion, or 77 cents a share, for the first quarter ended March 28, up from $3.18 billion, or 74 cents a share, a year earlier.

Stripping out certain one-time items, earnings came in at 73 cents a share. Revenue fell 2% to $11.13 billion from $11.3 billion.

Coca-Cola attributed the top-line decline to currency headwinds and the effect of refranchising bottling operations.

The company also made gains in nonalcoholic ready-to-drink beverages. As traditional soda sales have gone flat, Coca-Cola and rival PepsiCo have jumped into the market dominated by prebiotic soda brands with their own creations. Coke in February said it would launch a soda promoting digestive health called Simply Pop, while Pepsi in March acquired prebiotic soda brand Poppi for $1.95 billion.

Write to Laura Cooper at laura.cooper@wsj.com and Denny Jacob at denny.jacob@wsj.com

(END) Dow Jones Newswires

April 29, 2025 13:03 ET (17:03 GMT)

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