According to the 2024 Mongolian Population Nutrition Survey VI, 70 percent of men reported consuming sugary and carbonated beverages, while 47.3 percent said they consume sweets and desserts. Alarmingly, 48.8 percent of men aged 15 to 49 were classified as overweight or obese, which is a 57.4 percent increase compared to findings from the previous national nutrition survey. Overall, 58.1 percent of the adult population in the country is now considered overweight or obese. Experts attribute this growing health concern largely to the uncontrolled consumption of sugar-sweetened beverages. In response, the Law on Excise Tax includes a provision for the taxation of sugary drinks, set to take effect in 2027. B.Nyamdavaa, a doctoral candidate in economics at Macquarie University, Australia, has conducted a study on this issue. We spoke with him about his research and the anticipated impact of the upcoming tax policy.
What inspired you to focus your doctoral research on assessing the health and economic impacts of Mongolia’s sugary drink tax?
I am currently in my third year of studying economics at Macquarie University in Australia. I have not yet completed my doctoral thesis. My research consists of three articles under one main topic: assessing the health and economic impact of Mongolia’s sugary drink tax. I have completed the first two articles and am currently in discussions to publish them in international academic journals.
In 2022, I completed my master’s degree in agricultural economics at Macquarie University. At that time, my supervisor was working on a research project focused on the consumption of sugary drinks in Australia. I was invited to work as a research assistant, and during this period, I inquired whether there might be an opportunity to explore this area of research in Mongolia. I had not yet chosen a topic for my doctoral thesis. While reading and researching about the sugary drink tax, I came across the news that in March 2022, several female members of Parliament of Mongolia had drafted and submitted a bill to amend and supplement the Law on Excise Tax. As I reviewed international academic journals, I realized that there were no studies examining the effects of a sugary drink tax in Mongolia.
In other words, the specific reasons for supporting such a tax in the Mongolian context were still unclear. Therefore, we contacted M.Undram, a member of the working group behind the proposed legislation and a professor at the Mongolian National University of Medical Sciences. We selected her as our lead professor in Mongolia. M.Undram received her PhD in 2019 in the field of sugary drinks and had previously analyzed the 2016 and 2017 Household Socio-Economic Surveys to estimate price sensitivity. Since the timing was appropriate, the study officially began in April 2022.
The biggest threat gradually undermining the health of the Mongolian population is the rise in non-communicable diseases, particularly obesity, type II diabetes, cardiovascular diseases and cancer. These are now the leading causes of death in the country. As mentioned, 58.1 percent of all adults are overweight or obese, which is two to three times higher than the average for countries in the region. For example, the Household Socio-Economic Survey estimated that Mongolian households consume an average of 2.7 liters of sugary drinks per week. Additionally, based on the most recent data from the National Nutrition Survey VI, the average daily consumption among Mongolians is 160 milliliters of sugary drinks. This equates to 4.8 liters per month, which is two to three times higher than the sugar intake recommended by the World Health Organization.
Which types of beverages are classified as sugary drinks?
Sugary drinks include sodas, flavored milks, sweetened teas, energy drinks and fruit-flavored beverages. These drinks are a major source of excess calories and offer little to no nutritional value. Unlike 100 percent fruit juice or artificially sweetened beverages, sugary drinks contain added sugars such as table sugar and high-fructose corn syrup. For example, a single can of cola typically contains between 30 to 40 grams of sugar. These beverages are high in calories but lack essential nutrients. Numerous studies have shown that excessive sugar intake is a leading contributor to obesity, type II diabetes, cardiovascular disease and dental problems. These health issues are closely linked to the widespread consumption of sugar-sweetened beverages.
How much does the average household typically spend on sugary drinks annually?
Excluding staple consumer goods such as meat, flour and rice, carbonated beverages account for approximately 10 percent of a household’s food expenditure.
Can imposing excise taxes on sugary drinks lead to meaningful results?
Price sensitivity analysis plays a critical role in policy evaluation. It measures the percentage decrease in consumption resulting from a one percent increase in price. This analysis helps estimate the potential impact of tax increases, such as the expected reduction in consumption, as well as the corresponding decrease in obesity rates and non-communicable diseases. Predicting the magnitude of these outcomes is essential for justifying and designing effective public health policies.
Did you mention that the study on Mongolians’ consumption of sweetened beverages was based on the Household Socio-Economic Survey?
As mentioned earlier, my doctoral thesis consists of three research articles, each employing a different methodology. The first article focuses on calculating price sensitivity, using a cutting-edge, innovative model. This analysis was based on household socio-economic survey data from 2018 and 2021. Due to data quality issues, the 2019 and 2020 household data in Mongolia were not reliable and thus were excluded from the study. In this first article, I utilized the available data to estimate the price sensitivity of more than 30 non-consumer food products, drawn from purchase data on over 100 different food items. After initially submitting the manuscript to an international academic journal, I made further improvements and re-analyzed the findings using newly available data from 2021 to 2023.
The household socio-economic surveys used in the revised study included 11,063 households in 2021, 22,479 in 2022, and 8,375 in 2023. This data provided a solid foundation for assessing purchasing and consumption behavior across both urban and rural areas over a three-year period. Internationally, the standard methodology for calculating price sensitivity involves analyzing actual purchase data. The key variables in such analysis include total household consumption expenditure, the average unit price of the product, and the proportion of household expenditure allocated to that specific product.
What were the key findings of the research?
The main objective of the price sensitivity study is to estimate how much consumption decreases in response to a price increase. For example, if the price of a sugary drink rises by one percent and consumption falls by 1.5 percent, the price sensitivity is –1.5. Based on data from 2021 to 2023, the average price sensitivity for sugary drinks was calculated to be –1.44. In economic terms, if the absolute value of price sensitivity is greater than one, the product is considered price sensitive. This indicates that price-based policy measures, such as taxation, can be highly effective in reducing consumption.
Do you think the excise tax rates outlined in Article 6.9 of the Law on Excise Tax, starting at 500 MNT per liter for beverages with more than five grams of sugar per 100 ml in 2027 and gradually increasing, will effectively reduce consumption?
The World Health Organization recommends that a sugary drink tax be set at a minimum of 20 percent of the retail price. Setting the tax below this threshold is unlikely to affect consumption behavior, as it may be absorbed by inflation and therefore function primarily as a revenue-generating tool, rather than as a public health measure. In accordance with the 2022 draft amendment developed by the working group on the Excise Tax Law, it was proposed that a tax of 500 MNT per liter be imposed on sugary drinks. At the time, this represented approximately 20 percent of the average retail price. However, by 2027, due to expected price increases, the same tax may fall below the 20 percent threshold, making it less effective. In fact, for regular fruit juice, 500 MNT would amount to less than 15 percent of the retail price, further limiting the tax’s impact.
Mongolia’s approach to taxing sugary drinks follows a model similar to that of the UK. Under this model, beverages containing less than five grams of sugar per 100 milliliters are exempt from the tax. This has proven to be an effective structure in other countries. However, in Mongolia, most domestically produced beverages contain approximately 10 grams of sugar per 100 milliliters. This highlights the need for manufacturers to upgrade their production technologies before the law comes into effect. If they are able to reduce sugar content to below five grams per 100 milliliters, their products will be exempt from taxation. To support this point, my third study explored a hypothetical reformulation policy scenario in which 20 percent of domestically produced beverages are reformulated to contain less than five grams of sugar per 100 milliliters by 2027. I also conducted a sensitivity analysis comparing outcomes between this reformulation scenario and a case in which no reformulation occurs.
In addition to analyzing data from household socio-economic surveys, did the research also include surveys conducted directly with citizens?
To complement the findings from household socio-economic data, the second study focused on direct consumer behavior. A discrete choice experiment was conducted with a sample of 450 participants. The primary objective was to examine whether a price increase on sugary drinks would influence consumption, and how various policy measures might affect consumer decision-making when implemented alongside price changes. Participants were presented with a series of hypothetical product choices. For example, they were shown two beverage options with varying attributes: one might be priced at 1,200 MNT, contain high sugar content, be placed in an inconspicuous location in the store, and display a specific type of health warning label. The alternative might be lower in price, contain less sugar, have a different label, and be displayed differently. Each participant responded to 12 such scenarios, resulting in more than 5,000 data points. This behavioral experiment allowed us to quantify how consumers react to different combinations of factors, including price, sugar content, label design (e.g., red, yellow, or green health warnings), and shelf placement.
The analysis revealed that price sensitivity in this experimental context was similar to, or even greater than, that found in the first study, with an elasticity value above one. Importantly, the study showed that consumers tend to prioritize lower prices over other attributes, such as sugar content, label warnings, or placement visibility. However, it was also clear that a combination of interventions is more effective than price alone. Health warning labels, particularly when color-coded, and the strategic placement of products significantly influenced consumer choices. The results support the conclusion that a comprehensive approach, combining price increases, clear labeling, and thoughtful product placement, is the most effective way to reduce sugary drink consumption.
There is a common belief that even if the prices of alcohol and cigarettes were raised significantly, purchases would not decline. Similarly, some doubt whether increasing the price of sugary drinks would actually reduce consumption. What’s your position on this?
I do not agree with the claim that raising the price of alcohol and tobacco will not reduce consumption. In a meeting with the health minister, I presented my own analysis of the price sensitivity of alcoholic beverages and beer, which showed that domestically produced alcohol and beer are indeed price sensitive. In economic terms, this means that when prices increase, consumption decreases proportionally, particularly when the absolute value of price sensitivity exceeds one. Sugary drinks fall into this same category in many countries.
According to economic theory, products with high price sensitivity are classified as luxury goods when their prices increase, consumers reduce consumption. In contrast, the demand for essential goods tends to remain stable even when prices rise. Nonetheless, it is not enough to show that consumption decreases in response to price. What must also be evaluated is how a tax increase will affect the prevalence of non-communicable diseases linked to sugary drink consumption. This was the central focus of my third study, in which I conducted a cost-benefit analysis to assess the broader implications of the tax. Cost-effectiveness analysis is a method commonly used internationally to evaluate health policy outcomes by estimating both monetary and non-monetary benefits.
In Mongolia’s case, the working group that drafted the amendments to the Excise Tax Law claimed in official documentation that there would be no cost associated with implementing the law. However, studies conducted internationally suggest that the cost of implementation typically amounts to approximately one percent of the total tax revenue. In my study, I incorporated this one percent implementation cost along with an additional one percent to account for expenses related to technological upgrades that manufacturers would need to make in order to comply with the new sugar content thresholds. Thus, the total cost of implementation is estimated at two percent of the projected tax revenue. Despite these modest costs, the benefits of such a tax policy are substantial. Using a model that projects over a twenty-year timeframe, I found that out-of-pocket medical expenses for individuals suffering from non-communicable diseases would decrease by an estimated 4 million USD. In addition, expenditures from the Health Insurance Fund would be reduced by approximately 5.7 million USD.
Furthermore, based on population data for individuals aged 15 and older, the model estimates that 7,109 cases of non-communicable diseases could be prevented and 260 lives could be saved over the 20-year period. Tax revenues from sugary drinks during this same timeframe are projected to reach approximately 136 million USD, although this figure would vary depending on how many manufacturers choose to reduce the sugar content in their products to fall below the taxable threshold of five grams per 100 milliliters.
Does the country you live in impose an excise tax on sugary drinks, and what is the current level of their consumption?
In Australia, there is currently no excise duty on sugary drinks. However, due to the rising consumption and associated health concerns, there has been growing discussion and investigation into the possibility of introducing such a tax. I was involved in one of these research studies. In Australian supermarkets, cola and other carbonated beverages are widely available and inexpensive. Despite this, public awareness regarding their health risks has increased significantly, and many consumers are now making more conscious choices.
For instance, my own family and close friends avoid sugary drinks entirely, and they also refrain from consuming products made with white flour or rice. When my father, who used to drink sugary beverages regularly while living in Mongolia, visited me in Australia, I encouraged him to eliminate these drinks from his diet. Over the course of three months, I paid close attention to his nutrition, ensured he exercised regularly, and provided overall support for improving his health. As a result, he lost 15 kilograms, reducing his weight from over 100 kilograms. This personal experience further demonstrated to me the significant role sugary drinks play in contributing to obesity and overweight.
In my research, I also compared my findings with international experiences. For example, Mexico implemented a two-peso tax on sugary drinks in 2014, and numerous studies conducted before and after the policy change have confirmed its effectiveness. Mexico’s example has inspired many other nations to consider or adopt similar measures. In the past five years alone, more than 50 countries have introduced excise taxes on sugary drinks. As of 2022, more than 80 countries have adopted such a tax policy; today, the number exceeds 120. Despite this global trend, Mongolia must take tailored measures to address the issue within its own context. From a research perspective, taxes on sugary drinks have proven to be effective tools.
However, rather than focusing solely on taxation, it is also important to consider complementary strategies. These may include offering tax incentives for the production of healthy beverages, implementing clear and visible warning labels, regulating advertising, especially those targeting children, and enhancing public messaging around the risks of sugary drink consumption. Currently, in Mongolia, while nutritional labels are present on most sugary drinks, they are often difficult to read and do not meet international clarity standards. In contrast, labeling in Australia is standardized and clearly communicates the health implications.
