Global Ammunition Market is Estimated to Witness High Growth Owing to Increasing Military Budgets and Modern Weapon Systems
The global ammunition market is estimated to be valued at USD US$ 31,104.9 Mn in 2024, exhibiting a CAGR of 3% over the forecast period (2024-2031).
Market Dynamics:
Increasing military budgets of major economies to modernize their armed forces present a strong growth driver for ammunition manufacturers globally. Growing investments in weapon system modernization programs such as artillery systems, small arms, and mortar systems augment the demand for matching ammunition. According to data, the U.S. defense budget has increased from US$ 686 billion in 2016 to US$ 738 billion in 2022. Development of advanced ammunition such as smart ammunition and self-guided ammunition also expands business opportunities. For example, the demand for GPS-enabled precision guided ammunition is growing rapidly for modern artillery and mortar systems. Overall, the influx of new contracts for weapons and rising defense allocations bode well for ammunition makers worldwide over the forecast period.
Market drivers, restraints, and opportunities for the global ammunition market:
Rising Military Expenditure Across Developing Nations is Driving Demand for Ammunition
One of the key drivers for growth in the global ammunition market is the rising military expenditure across developing nations in Asia Pacific and Middle East & Africa regions. Countries such as India, China, Saudi Arabia, and others have significantly increased their defense budgets over the past decade to modernize their armed forces. A major portion of these increased expenditures is directed towards procuring new weapons, upgrading existing armaments, and stocking adequate ammunition supplies. According to data from Stockholm International Peace Research Institute (SIPRI), China's military spending rose 83% between 2010 and 2019 while India witnessed a budgetary increase of about 126% in the same period. The growing defense investments in these nations is translating to higher procurement of small arms, artillery shells, tank ammunition, and other bullets, thereby driving the global demand.
Stringent Firearms Regulation is Restraining Market Growth in Some Regions
One of the major restraints affecting the global ammunition market is the implementation of stringent regulations on civilian firearm ownership and use in some parts of the world like Europe. Countries like the U.K., France, and Australia have strengthened laws governing sales, transport, storage, and usage of guns and ammunition in the non-military commercial sector in the past decade. Such restrictions are aimed at curbing the misuse of firearms in violent crimes and mass shootings. While intended for public safety, these tightened controls have negatively impacted the commercial sales of ammunition in the affected regions. Manufacturers and retailers face operational challenges due to new compliance requirements. The demand growth remains limited in areas with more restrictive arms policies compared to those with lenient ownership rights. Overall, non-military regulatory obstacles pose a threat.
Higher Raw Material and Labor Costs Impact Profit Margins
Rising costs of key raw materials and resources used in ammunition manufacturing as well as increasing labour expenses are posing a challenge to the market. Metals like copper, lead, zinc, and aluminium are crucial ingredients in the production of bullets, cartridges, and shells. However, volatile price trends for these commodities exert downward pressure on the margins. Similarly, the labour-intensive nature of ammunition assembly makes it susceptible to increases in minimum wages across countries. Recent hikes in raw material costs and labour bills have constrained manufacturers' abilities to reduce product prices, thereby restraining their competitiveness and revenue growth potential if input costs are not adequately passed on. Tighter margins pose a threat, especially for smaller independent players.
Growth of E-Commerce & Online Retail Channels Presents Opportunities
One of the key opportunities for participants in the global ammunition market is the expansion of e-commerce and online retail platforms for commercial sales. While the non-military segment has traditionally relied on brick-and-mortar gun shops and stores, the penetration of internet is opening up new direct-to-customer distribution channels. Leading online retailers are ramping up their offerings of ammunition products alongside firearms and accessories. This provides wider geographic access to global consumers and opportunities to build virtual brand presence. Sellers can also leverage online marketplaces to conduct bulk B2B sales. The ongoing growth of e-commerce across world regions is presenting avenues to tap new customer demographics and supplement physical point-of-sale system. Manufacturers enhancing their digital strategy can gain an edge in the coming years.
Rising Popularity of Varmint Hunting will Boost Specialized Product Demand
Another opportunity for players in the global ammunition market lies in the increasing interest of hunters in varmint hunting activities which require specialized products. Varmints refer to smaller pest animals like coyotes, foxes, rodents etc. which hunters target recreationally in open fields and forests. According to surveys, the participation numbers have doubled over the past 5-7 years across North America and Europe.
Link - https://www.coherentmarketinsights.com/market-insight/ammunition-market-4679
Key Developments:
- In November 2023, the German government ordered about 100,000 rounds of 120 mm mortar ammunition from Rheinmetall for Ukraine. With a price tag in the lower-three-digit million-euro range, the purchase is part of a military aid bundle the U.S. supplied to the armed forces in Ukraine worth approximately USD 433 million.
- In February 2023, Remington Arms Company LLC launched its new product line. The company announced updates in its existing product line of handgun, shotshell, rimfire, and rifle.
- In January 2023, under the brands of Vista Outdoor Inc, the firms CCI and Speer Ammunition came out to introduce to the public two new products under their list of ammunition. CCI's Clean-22 Hyper Velocity and Speer's Gold Dot Carbine are the newly announced ammunition. The new ammunition will be unveiled at 2023 SHOT Show where they will be in Nevada.
Key Player:
Poongsan Corporation, Alliant Techsystem, Inc., MaxamCorp Holding, Olin Corporation, Nammo AS, CBC Group, BAE Systems, and Rosoboronexport
