Throughout the financial media, there's a tug of war going on right now when it comes to the major soft-drink companies like Coca-Cola (NYSE:KO) and PepsiCo (NASDAQ:PEP). On one hand, consumer preferences are shifting as people become more conscious of what they're putting into their bodies. Consumers are slowly but surely shying away from high-calorie sugary beverages. On the other hand, Coca-Cola holds one of the most valuable brands in the world and is hugely profitable. And, the company has branched out into a number of other beverage categories that may blunt the impact of changing consumer habits.

Coca-Cola's quarterly results epitomize this battleground environment. The stock rose after first-quarter results, but its underlying business isn't performing as spectacular as the market reaction implies.

Playing the expectations game
'Better than expected' seems to be the overarching theme throughout the corporate earnings season thus far. Coca-Cola's results definitely fit this bill. Volume growth came in stronger than analysts had anticipated, as particularly good performance in China offset declines in Europe and flat case volumes in North America.

The emerging markets once again posted very strong results in the first quarter. Case volumes grew 3% in what the company terms developing and emerging markets. This includes 12% volume growth in China and 4% volume growth in Brazil, two of the premier emerging economies.

Despite its strength in the emerging markets, Coca-Cola is still weighed down by the more mature economies. Total volume in developed markets fell 1%, which signifies the consumer shifts taking place in those regions. This brought down the company's overall results since Coca-Cola still derives a large portion of its revenue and profits from North America and Europe. In all, Coca-Cola's results weren't all that good. Reported net revenue declined 4% year over year, and earnings per share fell 6%.

PepsiCo is being affected by the same consumer shifts, but the impact is somewhat mitigated by the fact that PepsiCo has a large food and snacks business, which is performing well. This diversity in product offerings is looking more valuable with each passing quarter; the PepsiCo Americas Foods division grew reported net revenue by 3% in the fourth quarter.

A future catalyst in the making
Coca-Cola isn't likely to branch out into food any time soon, but one category that may fuel its future growth could be the budding partnership with Keurig Green Mountain (UNKNOWN:GMCR.DL). You'll recall that earlier this year Coca-Cola announced it would invest $1.2 billion to acquire a 10% minority stake in Keurig Green Mountain.

Together, the two companies will prepare the launch of the Keurig Cold beverage platform as part of a 10-year agreement. The deal creates obvious synergies, as Coca-Cola will have the potential to get its products to customers through an innovative new system. And, Keurig Green Mountain now has the ability to tap into Coca-Cola's world-class brand and massive distribution capabilities.

The investment is a very low-risk proposition for Coca-Cola. It doesn't have much to lose. It could hit a home run if the technology is universally adopted; and considering the stagnating case volumes in North America this quarter, it's certainly an idea worth pursuing. Plus, Coca-Cola's $1.2 billion investment is essentially pocket change for the company considering it collected $6.5 billion in gross profit in the first quarter alone.

Coca-Cola's mixed performance
There's no doubt that Coca-Cola remains a highly profitable company with a universally recognized global brand. This strength is realized through superb growth in the emerging markets, which will be critical to Coca-Cola's future. And, it continues to send back billions of dollars to shareholders through dividends and add value through share buybacks. At the same time, though, it's not producing the kind of companywide growth many investors would probably prefer.

Consumer habits continue to evolve, particularly in the developed economies like North America and Europe. Coca-Cola is still highly dependent on sparkling beverages and slower-growth economies, which are weighing on the company's results. The partnership with Keurig Green Mountain may reignite future growth, but there are still lingering uncertainties weighing on Coca-Cola for investors to keep in mind.