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Finance and Public Administration Legislation Committee
12/02/2016
Estimates
CROSS-PORTFOLIO INDIGENOUS MATTERS
Outback Stores Pty Ltd

Outback Stores Pty Ltd

[10:10]

CHAIR: Welcome. Mr Moore, do you wish to make a brief opening statement?

Mr Moore : No, thank you.

CHAIR: Thank you very much for your attendance today. I am interested in, whether it is your work or the government's work, reducing the sugar consumption in some communities.

Mr Moore : Certainly. At Outback Stores we have a health nutrition policy that is implemented in all the stores we manage our behalf of the owners. Sugar consumption is a big part of that. I think we all agree that poor diet in communities with consumption of fat, salt and sugar has a large impact on life expectancy in communities. Full-sugar soft drinks are a major contributor to health problems.

Working with our nutritionists and suppliers, we have preferential pricing for healthier products, such as diet soft drinks and water, to try to reduce the consumption of full-sugar soft drinks. Our figures show that it is working. We are reducing the market share. But it has been very slow progress. We also give water and diet drinks better placement on the shelves. We put full-sugar soft drinks at the back. We are about to start trialling reduced pack sizes to try to limit portions.

CHAIR: I do not want to overstate the problem, but I do understand, based on things I have picked up around the place, that sugary drinks have risen from 185,000 litres or thereabouts in 2011 to 280,000 litres in 2015 in your stores alone. Is that right?

Mr Moore : In our group of stores alone last financial year, we sold 1.1 million litres of full-sugar soft drinks, which is astounding.

CHAIR: 1.1 million?

Mr Moore : Yes.

Senator Scullion: In a quick segue to this, if you look at the Balgo store, something like half the profits come from full-strength soft drink.

Mr Moore : Yes, there is a commercial—

Senator Scullion: There is a commercial issue as well.

Mr Moore : To put that 1.1 million litres into perspective, we have now grown the market of bottled water to about 250,000 litres and of diets soft drinks to about 238,000 litres in the last year. We need to continue to grow that swing to get people off full-sugar soft drinks. As I said before, we preferentially price the healthier items, which makes full-sugar soft drink quite expensive in communities and so it does generate a significant profit for stores. For small stores that either are marginal or we provide financial assistance to, it is an important part of their business. It is important that we do not lose that business but that we get it onto other, healthier products.

CHAIR: Just clear this up for me. How many Outback Stores are there?

Mr Moore : We have 36 stores today. At the end of last year we had 37.

CHAIR: So one closed. Why?

Mr Moore : One went back to the owners and is now run by somebody else, which is the Yarralin store in the Territory.

CHAIR: How is the determination taken about whether it is an Outback Store or a privately run store?

Mr Moore : We are a management company, so the individual store owners choose whether they want to manage the store themselves or whether they want a management company or an independent operated managed store. So we have to fight for the contracts to manage the stores.

CHAIR: Do you receive a commission or a fee?

Mr Moore : We work on a fee for service. We charge a management fee to the store to manage that store on behalf of—

CHAIR: Profit is important in any commercial enterprise, but it is doubly important if they are paying a management fee to you.

Mr Moore : That is right. Profit is returned to the store owner. It is not our profit; it is the store owner's profit.

CHAIR: Yes, you just receive that fee. So what is Outback Stores doing to work with communities to alleviate some of the problems associated with such a high level of consumption of soft drink? I am not having a crack at the sugar industry, I say for my National Party colleagues who are listening to this! But overconsumption of soft drinks is linked to a whole bunch of dietary issues and renal failure, things which affect Aboriginal communities perhaps in a greater proportion than the rest of the community.

Mr Moore : Probably the first and most important thing is that any change can only come with buy-in from the community. We work with store owners around the impact of sugar soft drinks. In the quarterly reporting that we do with the store owners we report on a couple of things— local employment, the sales of full-sugar soft drinks, the sale of fresh fruit and veg, and the sale of tobacco products. Across the years now, we are getting more and more buy-in from communities around wanting to improve the health outcomes in communities.

More recently, people have started to link sugary items with health problems. So there is a lot more interest in communities around lowering the consumption of these unhealthy products and educating people to make healthier choices. That is where we are today. There has been a bit of a change in the past 12 months in the thinking of store owners and communities that something has to change. I think that everybody wants to support that change. Certainly we do. We want as much as we can to get the sale of those products down. I should add, our supplier wants to do the same. That is a really key point in this—

CHAIR: Your supplier being the soft drink supplier?

Mr Moore : Yes—Coca-Cola Amatil. They want to get the market share down.

CHAIR: They have also looked at that in schools and in communities in general as well. It is staggering. I had to get the calculator out. It is about 30,000 litres of soft drink per store that you manage. Some of these communities are very, very small.

Mr Moore : Obviously the bigger communities buy a bigger portion and the smaller communities buy a smaller portion. It does vary community to community, but I do not have those stats with me today.

CHAIR: What about fruit juice? Fruit juice is relatively high in sugar too.

Mr Moore : It is. Fruit juice has the same sugar content as full-sugar soft drink, so we try not to steer people onto that but rather onto the diet soft drinks and water, with water obviously being the best choice.

CHAIR: The juice consumption is in addition to the 1.1 million litres of full strength soft drink?

Mr Moore : Yes. It is only a small part of the market, though.

Senator Scullion: There are a number of other products, such as yoghurts, that have almost the same level of sugar.

Mr Moore : Yes.

CHAIR: Minister, what is your role in this with Outback Stores and trying to work on this problem? They are independent stores. You do not want to interfere in the profit motives of—

Senator Scullion: Indeed, they are.

CHAIR: But the cost to the community must be huge.

Senator Scullion: I think it is immeasurable as a social cost. We just had a Closing the gap report. We have spent a week thinking about that report. One of the challenges in the report is that where we were making an investment then in, say, infant mortality we are seeing a result now. But for the 10-year gap in life expectancy we need to start making more investments now to start turning that around. Particularly in remote and very remote communities, sugar is just killing the populations. It is putting them into that very high-risk and vulnerable area before they get to an age where those chronic diseases are evident.

Whilst they are independent, from time to time all the stores come to see me about some discretionary breakdown or if they want a hand with something. I use whatever leverage I can. I do what I can to assist in negotiations with the community on their approach to sugar. In fact, in Balgo I gave them some assistance but I said, 'We really want to talk about the sugar in the store.' They said Outback Stores were not so much reluctant, but did not think the community would really go for what I wanted. In fact, they did better. I think we were going to have one per cent a year, but they have now agreed to seven per cent a year. That was their idea. I think I am giving the community an understanding of this issue wherever I can. It is their store and you cannot force these things, but I think we are on the crest of a wave of understanding in the communities of the connection between health outcomes and the sorts of food you eat.

I have to say it is pretty tough. I was at the opening of Beagle Bay store the other day. Water was free. The doors were closed, crowds were ready to come in and Nige was trying to hide the full-strength coke. I was just cast aside. That was what they went for. The price did not matter. It was the most expensive liquid in that store and everyone went straight there. Now, I do not know much about this area, but I suspect people actually get an addiction—and it is not an addiction, but for the young kids that is what they have and that is what they crave.

CHAIR: It is an addiction. People are addicted to the sugar and the caffeine in it and everything else.

Senator Scullion: This is an area I am certainly very interested in and I think all of us should be thinking about ways that we can deal with this. I know the communities and the people who run the stores are becoming far more interested, and those connections are far closer between health and what you eat. I am going to continue to lever, where I can, where we can have some agreement from the communities about how we move those down and make them less available. The portion size has been really important. We are reducing the portion sizes available, so they still buy one of those but there is far less sugar in each one. We have reduced them. I have been trying to negotiate getting the two-litre and 1.5-litre bottles off the shelves completely. It is a difficult thing, but the evidence shows that whatever portion you buy, a child will drink 1½ litres. I thought that was surprising because the large ones go in the fridge or something like that, but a couple of kids just sit there until it is all gone. So the portion size is important and the negotiating opportunities are important, but this really is a matter for the communities. I have to say I am pretty proud of the way they have been taking this.

CHAIR: I have to say I was in Uluru last year and I think they have modified some of the dietary availability in some of the stores in that area. People were glowing about the difference in behavioural aspects and some of the health aspects as well. That is what piqued my interest in it. I think it is a big problem. I think Senator Siewert is going to say it is a problem, too. Is that right?

Senator SIEWERT: Yes.

CHAIR: Furious agreement!

Senator SIEWERT: I think the minister knows it has been a problem for a while. You may not be able to answer this now—I know we are running short of time—but I am wondering if you could tell us: was the 1.1 million litres the last financial year?

Mr Moore : Yes.

Senator SIEWERT: Could you provide—on notice, if you do not have it easily accessible—what it was the previous year.

Mr Moore : Yes.

Senator SIEWERT: I am also looking for figures for fresh fruit and vegies, because Outback Stores was first put in place to increase the availability of good food. I am wondering if you have comparison figures for fresh fruit and vegies for the last two years in terms of how the sales have gone.

Mr Moore : I do have those here. In the last financial year we sold 366 tonnes of fruit and veg. The year before was 354 tonnes. So that is a 3.45 per cent increase, which is less than we would like, but still heading in the right direction.

Senator SIEWERT: Do you have figures readily available from previous years on soft drink?

Mr Moore : I do not have them with me, but I can certainly get them. All of the nutritional stats we keep year-to-year, so they are very easy to provide. If I could just add this to the full-sugar soft drink: we believe we are the only company to ever drop market share of it. Since 2012 we have dropped the market share from 77 per cent to 68.3 per cent, which is nearly a nine per cent drop in full-sugar soft drink consumption.

Senator SIEWERT: Could you just say that again.

Mr Moore : From 2012 we have dropped the market share of full-sugar soft drink. In 2012 the market share of drinks—77 per cent of drinks sold—was full-sugar soft drink. In this past year it has dropped to 68.3 per cent. So we are making inroads but they are small. We need to do much better.

Senator PERIS: Do you have 37 stores now or is it 36?

Mr Moore : There are 36 at the moment.

Senator PERIS: Is it possible for you to break down the amount of soft drinks by each store?

Mr Moore : Yes we can.

Senator PERIS: And also the turnaround in terms of the delivery time of fresh fruit and vegetable produce.

Mr Moore : I will have to take those on notice.

Senator PERIS: That is fine.

Senator SCULLION: Are you asking for the time between each fresh food arrival?

Senator PERIS: For each of the stores—

Senator SCULLION: By barge or truck—

Senator PERIS: Yes barge or truck, and for the breakdown of those soft drinks.

Mr Moore : Yes, no worries.

Senator PERIS: How many of these communities have hot food available?

Mr Moore : About half of the stores that we manage will have a takeaway kitchen. There are varying degrees of equipment in those. We do not have deep-fryers in virtually any stores—I think there might be one in one of the old stores but all of the rest have been removed. There is no deep-fried food. There is a focus on healthier options—sandwiches, salads, wet dishes that are nutritionally balanced rather than the deep-fried rubbish that a lot of people have seen in the past in community stores. Sure, we still sell chicken legs and chicken quarters but it is all oven prepared rather than deep fried—it is a much healthier alternative.

CHAIR: That concludes the questioning. Thank you for your attendance.