North America Ammunition Market Outlook to 2030

North America Ammunition Market Overview

• The North American ammunition market is valued at USD 15 billion, based on a five-year historical analysis. This valuation is driven by increased defense spending, advancements in ammunition technology, and a rise in civilian firearm ownership.
• The United States leads the market due to its substantial military budget and a significant number of civilian firearm owners. Canada and Mexico also contribute, with Canada focusing on defense modernization and Mexico addressing security challenges.
• In the United States, the Firearms and Ammunition Excise Tax (FAET) is levied on the sale of firearms and ammunition by manufacturers, producers, and importers. The tax rates are 10% of the sale price for pistols and revolvers, and 11% for other firearms and ammunition. In fiscal year 2023, FAET collections amounted to approximately $761.6 million, reflecting the robust demand for firearms and ammunition. These funds are allocated to wildlife restoration and conservation programs under the Pittman-Robertson Wildlife Restoration Act, highlighting the tax's role in supporting environmental initiatives.

North America Ammunition Market Segmentation

By Caliber: The market is segmented by caliber into small, medium, large, rockets and missiles, and others. Small caliber ammunition holds a dominant market share due to its widespread use in both military and civilian applications. Its versatility in handguns, rifles, and light machine guns makes it essential for personal defense, law enforcement, and military operations. The high demand for small arms in civilian markets, coupled with military procurement, reinforces the prominence of this segment.

By Application: The market is also segmented by application into defense and civil and commercial sectors. The defense segment dominates the market, driven by ongoing military modernization programs and the need to maintain readiness against emerging threats. Government investments in advanced weaponry and ammunition to equip armed forces contribute significantly to this segment's leading position.

North America Ammunition Market Competitive Landscape

The North American ammunition market is characterized by the presence of several key players, each contributing to the market's dynamics through innovation, strategic partnerships, and extensive distribution networks.

North America Ammunition Industry Analysis

Growth Drivers

• Increased Defense Expenditure: Global military spending reached an unprecedented $2,443 billion in 2023, marking the highest level ever recorded. This surge is attributed to heightened security concerns and ongoing conflicts worldwide. The United States led with $916 billion, followed by China at $296 billion, and Russia at $109 billion. Notably, European NATO members collectively increased their defense budgets, reflecting a shift in threat perceptions. This substantial rise in defense expenditure underscores the escalating demand for advanced weaponry and ammunition.
• Rising Civilian Firearm Ownership: As of 2017, civilians globally owned approximately 857 million firearms, accounting for 85% of the total 1 billion firearms in circulation. The United States had the highest civilian gun ownership rate, with 120.5 firearms per 100 people, totaling about 393 million firearms. This widespread ownership drives consistent demand for ammunition, influencing market dynamics.
• Advancements in Ammunition Technology: The defense sector is experiencing significant growth amidst global conflicts like Russia's war in Ukraine. Military expenditures have increased by 34% over the past five years, leading to new orders for US defense contractors. This growth coincides with the AI revolution, suggesting a need for affordable, numerous, and advanced weapon systems. Lessons from Ukraine emphasize the necessity for adaptable and resilient communication systems that can withstand electronic warfare. The high cost-capability disparity in current warfare calls for innovative and cost-effective solutions.

Market Challenges

• Stringent Regulatory Frameworks: The firearms and ammunition industry operates under complex regulatory frameworks that vary by country. In the United States, the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) enforces regulations on the manufacture, distribution, and sale of firearms and ammunition. Compliance with these regulations requires significant resources and can impact market operations.
• Environmental Concerns: The use of lead in ammunition has raised environmental concerns due to its toxic effects on wildlife and ecosystems. Studies have shown that lead poisoning from spent ammunition poses significant risks to birds and other wildlife. In response, some regions have implemented regulations to reduce or ban the use of lead-based ammunition, prompting manufacturers to develop alternative materials.

North America Ammunition Market Future Outlook

Over the next five years, the North American ammunition market is expected to show significant growth driven by continuous government support, advancements in ammunition technology, and increasing consumer demand for firearms. The integration of smart technologies and the development of non-lethal ammunition are anticipated to open new avenues for market expansion. Additionally, the focus on environmental sustainability is likely to influence manufacturing processes and product offerings.

Future Market Opportunities

• Emerging Markets in Latin America: Latin American countries are experiencing growth in their defense and law enforcement sectors. For example, Brazil's military spending increased by 3.1% to $22.9 billion in 2023. This expansion creates opportunities for ammunition manufacturers to enter and establish a presence in these emerging markets, catering to the increasing demand for firearms and ammunition.
• Integration of Smart Technologies: Advancements in technology have led to the development of smart ammunition equipped with features like precision guidance and enhanced targeting capabilities. The U.S. military has been investing in such technologies to improve combat effectiveness. The integration of smart technologies into ammunition offers manufacturers the opportunity to provide value-added products that meet the evolving needs of modern armed forces.