BURLINGTON, MASS. — Keurig Dr Pepper is updating its coffee business strategy and shifting its focus from the near term to longer term. The updated strategy follows a weak third quarter that saw US Coffee sales and income from operations decrease.

“In US Coffee, we experienced a soft overall quarter,” said Tim Cofer, chief executive officer, during a conference call Oct. 24 with securities analysts to discuss third-quarter results. “Market share momentum drove solid volume mix, but pricing realization was challenged due to persistent category promotions, which weighed on segment revenue and profitability. We’re not satisfied with this outcome and are actively working to improve these trends even in the context of escalating inflation.”

For the quarter ended Sept. 30, Keurig Dr Pepper US Coffee sales fell 3.7% to $976 million from $1 billion the year before. Income from operations fell 15% to $245 million from $293 million the year prior.

“Obviously, we are not pleased with these results, but this performance deserves greater context,” said Sudhanshu Priyadarshi, chief financial officer. “Despite a still muted coffee category, we drove improving volume/mix in the third quarter with 2.7% growth. This was comprised of flattish pods and 14% growth in brewer shipments.”

Cofer said the market conditions have prompted management to plan “prudently” regarding US Coffee’s role in the company’s overall near-term performance.

“The reality is that at-home coffee category consumption remains muted,” he said. “However, within that, single serve is outperforming, and within that, our brands are as well. But because the category’s absolute growth rate is below the long-term trend, we are choosing to be judicious, and we’re focusing on the elements within our control.”

The company’s US Coffee strategy is focused on three components — affordability, premium and cold coffee.

“We saw strength across both Green Mountain and the Original Doughnut Shop, including particular traction and incrementality from our new line of refreshers — which we are building into a distinct single-serve platform,” Cofer said. “At the same time, we are attracting new brands into the Keurig ecosystem, including the recent addition of Black Rifle K-Cup pods, which began to scale in our network during Q3.”

Despite the progress, however, Cofer said as long as the at-home coffee category remains soft management is shifting its thinking from the near term to the longer term.

“ … We are playing the long-game by driving high-quality innovation and marketing and attracting new brands into the Keurig ecosystem,” he said.

For the quarter, Keurig Dr Pepper earned $616 million, equal to 45¢ per share on the common stock, and an improvement over the same period of the year before when the company earned $518 million, or 37¢.

Sales ticked up to $3.9 billion from $3.8 billion the year prior.

Underpinning the positive quarterly performance was the US Refreshment Beverages business unit that saw its sales rise to $2.39 billion from $2.27 billion the year before. Unit income from operations also rose to $722 million from $676 million.

“We saw a nice sequential acceleration in revenue growth, which increased at a mid-single-digit rate in the quarter,” Cofer said of the US Refreshment Beverages business. “Our volume/mix momentum built as we completed the distribution transition and significantly ramped display activity for Electrolit. We also delivered solid base business trends across our core brands.”

He called the consumer environment for beverages “dynamic,” saying carbonated beverages are outperforming expectations because they have accessible price points.

“Meanwhile, some still beverage categories remain under pressure, which we see as a reflection of the current consumer softness,” Cofer said. “This is particularly true for categories with a greater exposure to convenience stores and with higher average price per oz products like ready-to-drink teas. In these categories, we must continue engaging consumers with compelling brand activity, while also appropriately emphasizing value at key price points.”