Europe Ammunition Industry

Europe Ammunition Market Analysis

The Europe Ammunition Market is expected to register a CAGR of greater than 3% during the forecast period.

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• Due to the COVID-19 pandemic, industries were badly affected in Europe, and many countries in the region were on the verge of a recession that would exceed the economic depression that followed the 2008 financial crisis. Since the ramifications of such a situation for the defense sector could be catastrophic, the governments of the nations in the region mitigated the impact on the defense sector at an early phase.
• Thus, to defend political and defense interests, EU and NATO member states acted collaboratively and aggressively. A progressive and strategic increase in the European defense budget and the launch of infantry support projects are expected to create demand for sophisticated new-generation ammunition with advanced capabilities, thereby driving the market in focus during the forecast period.
• The Russia-Ukraine conflict has altered the European defense landscape. With NATO countries supplying large caches of weapons and other defense equipment to Ukraine, the demand has witnessed a new high due to the continuation of the war and the use of sophisticated weaponry on both sides.
• Reportedly, Russia fires approximately 20,000 rounds per day, while Ukraine fires between 4,000 and 7,000 rounds per day, signifying a great demand for ammunition. European nations are also procuring artillery and mortar systems to protect national borders against illegal trespassing and various types of trafficking, creating a considerable demand for associated ammunition.

Europe Ammunition Market Trends

Military to Dominate Market Share During the Forecast Period

• Due to tumultuous military scenarios in the region, such as Russia's invasion of Ukraine, cross-border conflicts, and rising terrorism, European nations have significantly increased their annual defense spending and associated military budget.
• During 2021, the overall military spending of European nations amounted to USD 418 billion, signifying a 3.0% increase over 2020. In 2021, the combined military expenditures of Central and Western Europe, two subregions that include the majority of NATO allies and all European Union member states, will be over USD 342 billion.
• The German government allocated USD 112.7 billion to the armed forces in February 2022. Due to Russia's invasion of Ukraine, the defense budget was raised, including investments and weaponry programs for German military forces. In addition, the French Minister of Armed Forces has proposed a USD 42.9 billion military budget for 2023, a 3 billion increase over the previous year. Furthermore, the increasing acquisition of modern weapons and ammunition fuels European market expansion.
• For example, the French Army began rapidly buying American-made loitering bombs in June 2022 as part of a longer-term push to field remotely operated weapon systems. Such developments are forecasted to drive the demand for various types of ammunition from military end users during the forecast period.

Russia to Generate the Highest Demand for Ammunition

• Russia is Europe's top defense spender, with a defense budget of USD 65.9 billion in 2021. The continuous conflict with Ukraine and cross-border disputes with NATO nations increased the demand for defense equipment, weapons, and associated ammunition. As Russia maintains its military occupation of Ukraine, the Russian military may face major weaponry shortages by the end of the year.
• Recent sanctions against Russia and successful counter-offensives by Ukrainian troops have resulted in rapid declines in its stockpiles of artillery shells and armored vehicles. At the same time, its ability to conduct air strikes and fire-guided missiles is expected to deplete by the year's end. This is likely to enhance ammunition purchases during the upcoming period.
• Russia is aggressively developing the BMPT armored vehicle, which is meant to carry a variety of missiles, light cannons, and machine guns capable of engaging a variety of targets, including enemy tanks and ground personnel. Over the last six months of the full-fledged war with Ukraine, Russian armed forces used more than 7 million shells. Thus, growing defense expenditure and rising procurement of munitions is expected to drive the ammunition demand from Russia during the forecast period.

Europe Ammunition Industry Overview

Due to the high level of technical skill necessary to make military-grade weaponry and ammunition, the European ammunition industry is consolidated, with only a few vendors, manufacturers, and suppliers supplying guns and ammunition in the region. BAE Systems plc, General Dynamics Corporation, Nexter Group, Rostec, and Rheinmetall AG are some of the key players serving the ammunition requirements of the European defense forces.

Europe Ammunition Market Leaders

Europe Ammunition Market News

• December 2022: A European NATO customer entered into a contract with Rheinmetall to supply a maximum of 300,000 rounds of 40mm ammunition, consisting of LV (low velocity) and HV (high velocity) variants. The contract includes a first call-off of approximately 75,000 cartridges.
• January 2022: The German Bundeswehr signed a contract with Rheinmetall AG to modernize its mortar systems and provide 120mm mortar ammunition. The contract is worth approximately EUR 27 million (USD 30 million) and will be completed by 2023.