* Nine-month sales volumes rise 8.2 pct vs expected 7.7 pct
* Volume growth 8.9 pct in Q3, up from 7.8 pct in first half
* Says market environment in Europe still challenging
* Shares rise 1.9 percent, outperforming food sector
By Silke Koltrowitz
ZURICH, July 4 (Reuters) - Barry Callebaut, the world's No. 1 chocolate and cocoa-product maker, said on Thursday that more outsourcing deals from food groups and strong demand from bakeries and restaurants lifted volumes by a better-than-expected 8.2 percent in the nine months to May.
Outsourcing, such as its 2012 deal with Unilever to supply chocolate for products including Magnum, has helped it outpace sluggish growth in the global chocolate market. Selling chocolate products to food groups generates about two thirds of the Swiss firm's sales, it said.
Sales volume growth accelerated to 8.9 percent in the third quarter, said Barry Callebaut - which also supplies Nestle , Mondelez and Hershey's - while the global chocolate market grew only 1.9 percent.
"Third-quarter volumes were very good, mainly driven by North and South America. We estimate that at least half of that growth is driven by outsourcing deals," ZKB analyst Daniel Buerki said.
Nine-month volumes in austerity-hit Europe, which accounts for about half of group sales, rose 5.7 percent. The company said, "Western Europe performed very well against the background of a still challenging market environment."
Its second biggest market, the Americas, accelerated to 17.1 percent growth, it said.
Sales revenue at the group fell 1.3 percent to 3.541 billion Swiss francs ($3.73 billion), in line with an estimate in a Reuters poll, as the group passed on lower raw material prices to its customers.
Increasing demand for chocolate products from bakeries and restaurants, offered by the group's still-small Gourmet business, helped drive volumes in all regions, the company said.
Analysts at Notenstein welcomed the fact the Gourmet business was finally becoming a growth driver, but said it remained to be seen whether stronger volumes would help the stock, languishing since December 2011, in the longer term.
"First, Barry Callebaut will have to translate the high volume growth into a sustainable increase in profitability," they said.
Shares rose 1.1 percent by 0840 GMT, outperforming a 0.7 percent stronger European food sector index.
One big challenge for the company is to make its $860 million buy of Singapore's Petra Foods' cocoa processing business profitable, analysts said.
It closed the Petra deal this week and said it paid less than the $950 million cited when the deal was first announced.
Its mid-term financial guidance is for 6-8 percent volume growth through 2015/16, and by then it also wants to restore profitability to the pre-acquisition level.
"Much depends on how Barry Callebaut will integrate the Petra Foods unit," ZKB's Buerki said. "They paid a lot and profitability of this business is lower."
Petra Foods' cocoa unit generated a loss of $28.9 million in the first quarter of 2013 on sales of $224.7 million.
Cocoa processors have been hit by weak prices for cocoa products, such as cocoa powder, which have fallen even more than prices for cocoa beans, squeezing processors' margins. Prices for cocoa beans have recovered from an 11-month low hit in March, but are far from the record-high levels of 2011.