Europe Ammunition Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Europe Ammunition Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The Europe ammunition market is anticipated to grow at a CAGR of more than 3% during the forecast period.

The impact of the COVID-19 pandemic on the Europe ammunition market revenues is deemed to be less. The growth in Europe defense spending and initiation of infantry support programs to develop sophisticated newer generation ammunition with better penetrating power, thereby driving the growth of the Europe ammunition market.

As per the 2016 Global Strategy, Europe seeks to attain strategic autonomy by 2025. Thus, the European Union (EU) nations have undertaken a multifaceted modernization program to achieve a higher degree of military capability. This has resulted in the initiation of several procurement programs for advanced weaponry and compatible ammunition.

However, the complexity of international security challenges has become more prominent, and the economic recession in the wake of the COVID-19 pandemic is envisioned to force governments to make difficult choices in their defense budgets that will greatly affect their near- and long-term military capabilities and procurement programs.

Key Market TrendsMilitary Segment to Dominate the Market During the Forecast Period

Total military spending in Europe in 2021 amounted to $418 billion, 3.0 percent higher than in 2020 and 19 percent higher than in 2012. The aggregated military spending of Central and Western Europe—two subregions that together include most NATO allies (see box 1) and all European Union member states—totaled $342 billion in 2021 ($305 billion for Western Europe and $36.6 billion for Central Europe). The combined military expenditure of these subregions increased by 3.1 percent in 2021. Military spending in Western Europe grew at a higher rate (3.4 percent) than in Central Europe (1.3 percent). The growth in military spending in Central and Western Europe was mostly driven by increased expenditure on arms procurement and military R&D. For instance, In June 2022, The French Army has started the process of quickly procuring American-made loitering munitions as part of a longer-term effort to field remotely operated weapon systems.

Russia to Generate the Highest Demand for Ammunition

Russian military expenditure grew for the third consecutive year in 2021. Russia’s spending rose by 2.9percentt, to reach $65.9 billion (or 4.1 percent of its GDP), buoyed by high oil and gas prices.

The Russian military could see massive arms shortages before the end of the year as it continues its military occupation of Ukraine. Recent sanctions on Russia and successful counter offenses by Ukrainian troops have led to rapid declines in its stockpiles of artillery shells and armored vehicles, while its ability to conduct air strikes and fire-guided missiles will likely be exhausted by year's end. This will lead to an increase in the procurement of ammunition in the forecasted period.

In April 2020, the Russian design bureau Military Industrial Company (MIC) initiated battlefield testing on the latest VPK-Ural armored vehicle, designed to transfer a maximum of 12 fully geared personnel safely on the battlefield. In the event of successful testing, MIC could be awarded a contract under the Russian military’s rearmament program until 2027. Russia is actively inducing the BMPT armored vehicle designed to carry a mix of missiles, light cannons, and machine guns that can engage a variety of targets, ranging from enemy tanks to ground troops.

Competitive Landscape

The Europe ammunition market is consolidated as only selected vendors manufacture and supply weapons and ammunition in the region due to the high technological expertise required to produce military-grade weapons. Some of the prominent ammunition manufacturers in the region are BAE Systems plc, Rheinmetall AG, General Dynamics Corporation, Nexter Group, and Rostec State Corporation. Rheinmetall AG continues to expand its role as a major supplier of ammunition in the region. For instance, In September 2022, Rheinmetall and its partner UVision won the first order from a major European NATO military force for HERO loitering munitions. The customer, the formation of a special force, ordered Hero-30 combat and training munitions, simulator, training courses as well as integrated logistics equipment and support.

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