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Ammunition Market - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2030)

Ammunition Market - Growth, Trends, COVID-19 Impact, and Forecasts (2021 - 2030)

  • September 2021
  • 178 pages
  • ID: 6155675
  • Format: PDF
  • Mordor Intelligence LLP

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The ammunition market was valued at USD 7.95 billion in 2020 and is poised to reach USD 11.85 billion by 2030, witnessing a CAGR of 4.01% during the period 2021-2030.

The impact of the COVID-19 pandemic on the ammunition market revenues is deemed to be less. The pandemic might have a slight impact on the demand side dynamics of the market, as some countries might opt for budget cuts, affecting weapon and ammunition procurement programs. However, these procurement delays are expected over a short duration and drastic fluctuations in demand due to the pandemic are not anticipated.

The growth in global defense spending and initiation of infantry support programs to develop sophisticated and deadlier weaponry and ammunition is anticipated to bolster the adoption of newer generation ammunition with better penetrating power, thereby driving the growth of the ammunition market. Also, several new weapon and ammunition development programs are underway to develop lighter but deadlier ammunition with an enhanced range. The growth in technological advancements is fostering such developments.

The demand for advanced weapons and related ammunition is primarily from countries in Europe and Asia-Pacific, either replacing their aging equipment or expanding their inventory to strengthen their armed forces.

Key Market Trends

The Small Caliber Ammunition Segment Accounted for the Highest Share in 2020

The small caliber ammunition segment held the largest market share in 2020. The need to maintain a sufficient inventory of ammunition with the militaries worldwide and the increasing demand for training ammunition is also anticipated to have a positive impact on the military small caliber ammunition segment. In addition, several militaries have been involved in peacekeeping missions and counter-insurgency operations in foreign countries and require a continuous supply of ammunition for continuing their operations. This has been driving the growth of the segment currently. Recently, the Indian government approved the acquisition of the second batch of around 72,500 Sig Sauer assault rifles from America under fast-track procedures for the Army. The first batch was ordered in 2019 and received in 2020. The first lot of these assault rifles was provided to the troops deployed in the counter-terrorist operations in Jammu and Kashmir. Militaries are increasingly moving towards higher calibers like 7.62 mm projectiles, as the existing widely used calibers like the 5.56 mm are becoming ineffective in piercing the tougher armors. Countries, like the United States and India, are also developing firearms based on new calibers like the 6.8 mm ammunition, which are expected to witness higher demand in the years to come. Governments are also focusing on increasing the local manufacturing capabilities of ammunition for their armed forces, which is expected to further intensify the competition between the global and local players, especially in the regions like the Asia-Pacific and Middle-East and Africa, during the forecast period.

North America Region Held the Largest Market Share in 2020

The North America region held the largest market share in 2020. The United States has one of the largest armed forces in the world, with 2.26 million total military personnel, of which 1.4 million serve as active military personnel and 0.86 million serve in the reserve force. The country has the largest military spending in the world. In addition to active combat, US personnel are typically deployed as part of several peacekeeping missions, military attachés, or are part of embassies, consulate securities, and several other classified missions. Such deployments have significantly contributed toward the growth of procurement of arms and ammunition by the US armed forces. The US military expenditure increased by almost 4.39% in 2020 to reach USD 778.23 billion. The United States remained the largest defense spending country in 2020 and represented 39% of global spending. The enhanced capabilities of China and Russia on the battlefield forced the United States to increase its investments into advanced weapon systems and ammunition. Also, participation in NATO missions abroad generates significant demand for different types of ammunition. Currently, the US Army is planning to move away from the 5.56 mm round in its infantry weapons that have been the standard for decades. On this note, in September 2019, the US Army selected three firms to advance to the next phase of testing to select the service’s Next Generation Squad Weapon. The Army chose General Dynamics-OTS Inc., AAI Corporation Textron Systems, and Sig Sauer Inc. to deliver prototypes of both the automatic rifle and rifle versions of the NGSW, as well as hundreds of thousands of rounds of special 6.8 mm ammunition common to both weapons. Such procurement plans and advanced ammunition development programs are anticipated to drive the market studied in the region during the forecast period.

Competitive Landscape

The ammunition market is fragmented with the presence of several global and local ammunition manufacturing companies. However, the market is majorly dominated by large international players like BAE Systems, Rheinmetall, General Dynamics, and RUAG while the rest of the market share is controlled majorly by the players in local defense industries of several countries. All the ammunition manufacturers suffered a decline in their revenues in 2020 due to COVID19 related restrictions and market uncertainty. Although most countries have officially declared plans to increase their defense expenditure, the increase has not been directly visible in revenues for ammunition manufacturers. To cater to the future demand, companies are involved in the research and development of new and advanced munitions that will allow the users to employ fire and forget type munitions and increase the lethality of weapons and increase the area of impact. Some of the suppliers of munitions are also working on extending the munition range as well as the impact area, in preparation for future weapons systems and connected warfare. Players are expected to benefit from early unique munition development plans as well as domestic production capability in each of the major procuring countries, as these countries are working on developing indigenous models for both domestic and international consumption and are gaining market share slowly but steadily.

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