April 17 (Bloomberg) -- Coca-Cola Co. said first-quarter profit rose 14 percent, exceeding analysts' estimates, as demand for Coca-Cola Zero and coffee drinks in Japan gave sales the biggest boost since 1994.

Net income at the world's largest soft-drink maker increased to $1.26 billion, or 54 cents a share. Coca-Cola, based in Atlanta, said today it earned 56 cents excluding expenses, 3 cents higher than the average estimate of analysts.

Sales jumped 17 percent to $6.1 billion on Coca-Cola Zero's gains of more than 10 percent in North America. The company developed the diet cola, which was made to taste like regular Coke, to slow declines in the U.S., where growth trails that of PepsiCo Inc. Volume climbed 17 percent in China and 7 percent in Latin America.

``They need to pick up some gains in the new products, Coke Zero, and reinvigorate some of the lesser-known brands like Sprite,'' said Pete Hastings, a fixed-income analyst at Morgan Keegan Inc. in Memphis, Tennessee. The firm holds bonds of Coca- Cola bottlers.

Shares of Coca-Cola rose $1.30, or 2.6 percent, to $51.57 at 4 p.m. in New York Stock Exchange composite trading, the biggest gain in six months. The shares are at their highest since June 2004, and the stock has increased 26 percent in the past year. PepsiCo, the second-largest soft-drink maker, rose 15 percent in the same period.

`Successful' Zero

Chief Executive Officer Neville Isdell, who came out of retirement in 2004, has called Zero the ``most successful launch in 20 years'' after other new drinks such as coffee-flavored Coca-Cola Blak and Coca-Cola with Lime failed to attract drinkers.

Excluding the write-off of a Philippines bottler and gains from asset sales, Coca-Cola said profit was 56 cents a share. The average profit estimate of 11 analysts surveyed by Bloomberg was 53 cents. The company earned $1.11 billion, or 47 cents, a year earlier.

Analysts projected sales of $5.64 billion for the quarter.

Total volume climbed 6 percent, the most in five years, led by a 16 percent gain in Asia.

Asian volume was helped by growth in China and a 3 percent gain in Japan, where the company gets one-fifth of its profit, on demand for canned Georgia Coffee drinks, Coca-Cola and Aquarius water.

Japan, China

``They're getting good lift from Japan and China,'' said Herb Achey, an analyst at U.S. Trust in New York, on April 10. The firm manages $100 billion including about 5 million Coca- Cola shares.

Japan volume had dropped in three of the four quarters last year after an earlier marketing campaign for Georgia Coffee aimed at younger drinkers unintentionally turned off middle-aged consumers.

North America volume fell 3 percent, the third straight decline, after the company raised prices to overcome higher costs for aluminum and sweetener.

Coca-Cola depends on soda for 80 percent of sales, compared with less than 20 percent for PepsiCo. Both companies posted soft drink declines of more than 1 percent last year in the U.S. as consumers cut back on sugary drinks, according to data compiled by industry journal Beverage Digest.

`Continued Weakness'

There will be ``continued weakness'' in the U.S. during the first half of the year, with ``sequential improvement'' in the second half, Coca-Cola President Muhtar Kent said today on a conference call with investors.

Kent said the company plans to ``refocus'' its bottled tea offerings because ``we believed we were not winning in tea.'' Coca-Cola's Nestea brand has 10 percent of the U.S. tea market, lagging PepsiCo's 37 percent share with Lipton and SoBe.

Coca-Cola is ``looking at new opportunities in the market in rapid fashion,'' Kent said, without being more specific.

The company recently unraveled an agreement with Nestle SA to give both companies more freedom to make or buy their own tea drinks. Analysts including Mark Swartzberg of Stifel Nicolaus & Co. say the change allows Coca-Cola to buy other tea makers such as Arizona Beverage Co. or the Snapple brands owned by Cadbury Schweppes Plc.

11 Percent

The European unit posted an 11 percent increase, the most in at least two years, on an 11 percent jump in Germany, where Coca-Cola is consolidating seven bottlers to deliver drinks more efficiently.

The company expanded Coca-Cola Zero to 20 new countries including the Netherlands, Ireland and Belgium to lift sales in Europe, and ran advertisements saying it tastes identical to regular Coke, only without the calories. The drink will be available in 40 countries by the end of the year, the company said.

Latin America was helped by increases in Brazil and the introduction of Coca-Cola Zero in Mexico and Argentina.

Coca-Cola in February bought San Miguel Corp.'s stake in a Philippines bottler for $590 million as it tries to halt ``double digit'' declines last year because of pricing and availability problems.

Coca-Cola repurchased $676 million of its stock in the first quarter, and said it plans to buy back as much as $3 billion for the entire year.

To contact the reporter on this story: Mary Jane Credeur in Atlanta at mcredeur@bloomberg.net.

Last Updated: April 17, 2007 16:15 EDT