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Protein was the star in an otherwise sluggish North American biz as Danone worked on rebuilding availability and relevance of its International Delight creamers after product recall in Mar while setting restage for Silk plantmilk brand. Context was a Q3 in which the diversified Paris-based CPG giant was able to claim progress on revitalization plan under CEO Antoine de Saint-Affrique. Adjusted sales rose 4.8% to &euro;6,9 mil on 3.2% pickup in volume/mix augmented by 1.6% in price realization. Some 0.7 pts of that gain was attributed to Jul acquisition of majority of Kate Farms, which offered half-bil platform to finally get Danone meaningfully into infant nutrition game in US. Undisclosed amount of sales was left on the table as Danone, like rivals, has navigated a capacity squeeze on yogurt that should be alleviated this qtr as new capacity kicks in. Co cited outstanding performance in China and continued pickup in Europe, but allowed that N Amer endured "softer growth . . . despite sustained momentum in high-protein." Among major initiatives has been push into shelf-stable protein shakes (BBI, May 13), with Danone leadership believing it can change narrative in crowded category by educating consumers that not all protein shakes are created equal.It&#39;s Quality Not Just Quantity That Matter in Protein CFO Juergen Esser, who handled investor call this morning, described how latecomer to category intends to carve out distinct role. "We are actually innovating in that space so that we go from quantity of protein to quality of protein and other ingredients," he said. Prime example is recently launched Oikos Fusion line, with patented blend of whey protein, amino acids and prebiotic fibers targeted to build or maintain muscles during a weight management regime, perhaps on GLP-1 drugs (BBI, Aug 11). Danone is betting it can prosper as consumers learn to distinguish between protein brands. "It becomes more and more functional, more and more science-based, and I think that will help to keep the momentum of the category moving forward," Esser said. For now, the push by refrigerated player into ambient shakes is styled an "exploration," with co awaiting more detailed data on repeat purchases before deciding how aggressively to expand brand next year.Europe Back in Growth Mode but Work to Do in America By geographic region, core European market enjoyed sales acceleration to 2.6% on volume/mix gain of 2.1% and pricing of 0.5% as yogurt leader plowed into protein-rich adjacencies like skyr via Danone Skyr and kefir via Activia Kefir while riding high-protein entries under YoPro and Alpro brands. Evian was key contributor to robustly growing Waters segment. On innovation side, co claimed vitamin-infused extension to Volvic brand is off to good start. "Europe has now delivered 8 consecutive quarters of positive volume/mix, a testament to the effectiveness of the ongoing transformation," Esser declared.In North America, sales rose 1.5% on adjusted basis to &euro;1.6 bil compounded of 0.3% volume/mix and 1.2% pricing. "Momentum remained strong in high-protein, with new innovations launched during the quarter," per earnings announcement, referencing likes of the protein shakes and enhanced Oikos Fusion. On International Delight front, brand had taken a big hit after voluntarily recalling 75,000 bottles in Mar over spoilage issue that sickened some consumers, losing shelf space that rivals were quick to snatch, but now it's "progressively regaining competitiveness." By contrast, plant-based segment - meaning restaging Silk brand acquired in WhiteWave deal - "remains work in progress." As Esser summarized situation, "On one hand, high-protein yogurts continuing to outperform in a very dynamic growth space and despite major capacity constraints. While coffee creamers are progressively rebuilding distribution, we have more work to do to bring plant-based (Silk) back to sustainable growth" to match performance of Alpro brand in Europe. All told, so-called EDP unit that comprises dairy portfolio edged up 1.5% to &euro;1.4 bil in region. As in Europe, Evian was key to 5% growth in Waters segment to &euro;77 mil. On investor call, Esser gave shoutout to Henri Bruxelles, who after Aug reorg is set to take leadership role for Americas region on Jan 1 (BBI, Aug 26). Even before he formally takes reins, he "is already bringing a fresh perspective to the different categories," transferring some of innovation expertise from European unit where he previously worked.As long as it's in rebuilding mode on International Delight, Danone is taking opportunity to get items more in synch with what shoppers are looking for today. That means moving beyond chemical-looking ingredient lists. "Beyond the distribution rebuild, we will leverage the moment to further innovate in this category, addressing the emerging trend of naturalness and clean label," Esser said. "The US team is actively working on solutions to bring this business back to where it belongs." He reminded listeners that before what he delicately called "the supply chain issues we had at the beginning of the year," the brand had been winning share for 2 consecutive years. "Structurally, we believe that this brand is a very powerful brand in a continuously growing category," particularly as economically stressed consumers make more of their coffee at home. (We got a lift from Yahoo transcript in writing this story.)

Claiming Q3 Progress on Revitalization Plan, Danone Plots Protein Push in US While Rebuilding from Int'l Delight Creamer Recall & Restaging Silk Plantmilks

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