But the company topped earnings estimates, sending shares up nearly 2% in morning trading.
Here's what the company reported for the quarter ended Sept. 25 compared with what Wall Street was expecting, based on a survey of analysts by Refinitiv:
Coke reported third-quarter net income of $1.74 billion, or 40 cents per share, down from $2.59 billion, or 60 cents per share, a year earlier.
Excluding asset impairments, severance costs related to its restructuring plan and other items, the beverage giant earned 55 cents per share, topping the 46 cents per share expected by analysts surveyed by Refinitiv.
Net sales dropped 9% to $8.65 billion, beating expectations of $8.36 billion. Organic sales fell 6%, and unit case volume, which helps measure demand without the impact of pricing or foreign currency, declined 4%.
All four of Coke's drink categories reported declines in unit case volume. Sparkling soft drinks was the least affected, with its volume falling only 1%. Demand for Coke Zero Sugar and trademark Coke drinks lifted the category, although overall it was hurt by the decline in the North American fountain business.
Juice, dairy and plant-based drinks saw volumes shrink by 6%, hurt by pressure in Asia Pacific and Latin America. Unit case volume of water, enhanced water and sports drinks fell by 11%. Tea and coffee was the hardest hit, with demand dropping 15%, primarily due to the company's Costa cafes. CEO James Quincey said that Costa cafe traffic is unlikely to recover in the near term.
The company noted quarter-over-quarter improvements in demand. While the pandemic continues to limit drink purchases at movie theaters, restaurants and office buildings, Coke said at-home demand is still elevated. Away-from-home volume fell by the mid-teens this quarter, an improvement from its nadir of 50%, helped by higher sales at fast-food restaurants and convenience stores.
Rival PepsiCo reported 3% organic sales growth for its North American beverage unit in its third quarter. Quincey said on CNBC's "Squawk on the Street" that Coke's away-from-home business is larger than Pepsi's.
"We have been winning share in at-home channels, and that's going to set us up for emerging stronger and being in a stronger position, even though mechanically in the short term, we lose share," he said.
Quincey said that the company is prepared for "setbacks" from more restrictive pandemic measures. Some localities in Europe, for example, have entered lockdowns again. He also said that the company had always anticipated that winter in the Northern Hemisphere would be its toughest season.
As it navigates the crisis, Coke is undergoing a transformation. It is slimming its portfolio, cutting drinks like Tab that haven't sold well and don't have much opportunity for growth. The company recorded a $160 million impairment charge this quarter tied to its Odwalla brand, which is also being discontinued. At the end of the process, it plans to slash the number of master brands by 50% to about 200.
"The pandemic helped us realize we could be bolder in our efforts," Quincey said.
Coke did not provide an updated outlook for the remainder of 2020, citing the uncertainty of the impact of the pandemic. The company pulled its forecast in March.
Correction: Coca-Cola announced its earnings on Thursday.