Updated to include comments from Coca-Cola's chief operating officer.

China's seemingly strong economic growth this year may be nothing more than smoke in mirrors, judging by the latest results from Coca-Cola (KO) - Get Report .   

Coke's net sales fell 5% from the prior year to $11.5 billion, narrowly falling short of analysts' forecasts for $11.6 billion. Excluding the impact of the strong U.S. dollar, sales rose 3%, in line with Wall Street estimates. Adjusted for one-time items, earnings came in at 60 cents a share, surpassing Wall Street estimates for 58 cents. As in recent quarters, Coca-Cola's bottom line benefited from cost cuts and a heavy dose of share repurchases.

Coke's closely watched North America market saw mixed results. Sparkling beverage -- which includes products such as Coca-Cola soda and Sprite -- saw volume fall 1%. Coke said it saw gains in Sprite, Fanta and energy drinks. Sales of trademark Coke declined. Volume for still beverages such as tea and water rose 3%. North America's profit dropped 1%, but was unchanged excluding one-time items.

Meanwhile, volatile economic conditions overseas took their toll on Coke, with sales falling in Europe, Latin America and Asia/Pacific. As a result, Coke lowered its full-year organic revenue growth outlook to 3%, from 4% to 5% previously. It maintained its full-year profit growth target, excluding one-time items, of 6% to 8%. Shares of Coke fell 3.5% to $43 recently on the news.

In particular, sales for Coke's Asia-Pacific region fell 2% from the prior year, while operating profit dropped 1% due primarily to worse than expected demand in China. "I don't think the fast-moving consumer goods sector is feeling that level of GDP growth at the moment in terms of consumer sell-out," Coca-Cola President and Chief Operating Officer James Quincey told TheStreet an interview when asked if the Chinese economy felt as if it was growing at the 6.7% clip it did during the second quarter. 

Government officials in China have a target of 6.5% to 7.5% GDP growth for this year. 

Tough conditions in China amid the country's economic slowdown has prompted Coke to take several actions. For instance, the company plans to introduce more premium beverages in the metro areas that are holding up better. On the lower income spectrum, or as Quincey referred to as "blue collar", Coke is placing its attention on selling smaller can sizes that tend to have a lower price point while also looking to promote other products to drive sales.  

Coke's quarter capped a challenging three months for the sparkling beverage market as consumers continued to seek out lower calorie, lower sugar options. According to Beverage Digest, carbonated soft drink volumes fell 3.1% in the second quarter, lagging gains in still beverages such as bottled water (up 7.3%) and ready to drink tea (up 2.5%).

Volume for regular Coke rose 0.3% in the second quarter compared to a 3.6% drop for regular Pepsi. Both Coke and PepsiCo (PEP) - Get Report  continued to see weakness for diet colas -- volumes for Diet Coke and Diet Pepsi fell 5.6% and 9%, respectively, during the quarter, said Beverage Digest.

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