The medium caliber ammunition market is estimated to register a CAGR of over 1.5% during the forecast period.
- Uncertainties in territorial rights between many countries, such as the Saudi-Iran cold war in the Middle-East, are among the major causes disturbing the geopolitical climate. The most common reaction of governments is increasing the military spending, in order to improve the national security of their respective countries. Since ammunition, of all types and calibers, play a major role in defense operations, the increased spending acts as a major driver for the market.
- Terrorist activities have been on the rise, becoming the most pressing issue for decision-makers dealing with diplomatic and military operations. Countries, like Iraq, Syria, Africa, and Pakistan, have been highly vulnerable to terrorist attacks in the past couple of years. This has increased the procurement of ammunition by the respective armed forces.
- Few countries follow a protectionist strategy to protect the domestic ammunition industry against foreign monopoly. Such laws and regulations serve as a deterrent for foreign companies trying to expand into other countries.
Key Market Trends
The Non-lethal Segment is Expected to Experience the Fastest Growth
Currently, the lethal segment dominates the market in terms of revenue share. However, the non-lethal segment is anticipated to register the highest CAGR during the forecast period. The non-lethal applications for medium caliber ammunition range from personal defense by private owners to riot-control by law enforcement agencies (police and other civil law units). The increasing preference for non-lethal weapons by riot control forces and law enforcement agencies, to reduce the collateral damage, will be a major driving factor for this segment to grow at a higher CAGR compared to the lethal segment.
Asia-Pacific and Middle-East and Africa are Expected to Generate the Highest Demand
As of 2019, Asia-Pacific held the highest market share, followed by North America, primarily due to the growing demand for ammunition in countries like India, China, Japan, and South Korea. Major countries in the Asia-Pacific region have increased their defense spending in the past year, focused on strengthening their armed forces against growing geopolitical tensions and terror threats. However, the demand is expected to shift toward the Middle-East and African countries. The present geopolitical scenario in these nations demands that ammunition purchases be on the governments’ priority list and the trend is expected to continue in the forecast period. Due to political instability in its neighboring countries (Iraq to the north, Iran across the Persian Gulf, and Yemen to the south), all posing significant threats and housing strong Islamic movements, Saudi Arabia was the second-largest importer of arms during the period of 2013 – 2017, with a global share of 10%. The share is expected to increase further in the coming years.
The market is dominated by global defense systems and technology providers, such as General Dynamics Corporation, BAE Systems plc, and Rheinmetall AG. Majority of the geographic regions have local players who are equally strong, providing smaller sub-systems of a larger network/project in partnership with the global leaders. Over the years, the local players have mastered technology and product design, and they are expected to become threats to the existing large players who have been demanding monopoly style prices for their products and services in exchange of brand value, reliability, and quality. Local players in North America, the Middle-East, and Asia are particularly threatening the global leaders as they aim to provide an all-round solution at a fraction of the cost quoted by these global leaders without compromising on quality or reliability. Furthermore, keeping in view the sanctions made by the United States against Russia and China, countries in the region are aggressively producing medium caliber ammunitions to meet their needs without the support of international manufacturers, to avoid the situation of Russia and China, in the future.
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