Ammo Prices on the Rise... But It's Not What You Think
If you are on social media or read some of the same blogs I do, then you might have seen talk about “ammo prices rising substantially in 2024”. Let’s dissect this and see if there is any merit to that claim…
This time, unlike the 223/556 scare from a couple months ago, the source appears to be legit and came from Vista Outdoors in a letter to their distributors. It was picked up by Newsweek (who reads Newsweek anyway???) who then added a pretty dubious headline (see below).
Apparently, Vista is “anticipating” a global gunpowder shortage in 2024. Not an actual shortage they are experiencing right now. A potential shortage. So, with some crystal ball baller skills, they are raising prices now.
One wonders how much of this is true and how much is more scare tactics.
In the “scare tactic” department, if you just look at the headline from this Newsweek article, you would think the sky is falling, but when you read the article you'll see they took words out of context (big shocker there).
The response they want is: "Oh no! Ammo prices are going to rise substantially so I better run out and buy more right now!" This is at best clickbait and at worse a coordinated plan cause an ammo panic.
Here is what Vista actually said in the article:
"Due to world events our suppliers have notified us of unprecedented demand for and an anticipated global shortage of gunpowder, and thus has increased our prices substantially," Vice President of Sales, Sporting Products Brett Nelson said in the letter. "We must therefore raise our pricing to help offset those increases."
Emphasis is mine.
According to Vista, their price for gunpowder will rise “substantially”... NOT the price of their ammunition like the article implies. Take THAT Newsweek (my 3rd grade reading comprehension teacher would be so proud)!
The problem (yet again) is that you have influencers all over the internet amplifying this one article and taking it out of context saying that ammo prices are going to rise “substantially” in 2024 when that isn’t even what the article says.
Look, I used to reload my ammunition. Many of you probably do as well. What percent of the overall cost of each reloaded round was the GUNPOWDER? Off the top of my head I would say 10%... maybe 15%?
I’m not entirely sure anymore, so let’s do some math…
A typically 9mm round components (retail prices) to get a reasonable percentage for the gunpowder component:
Brass (new): $0.20
Bullet: ~ $0.15
Primer: $0.08
Powder: 5-7 grains depending on powder brand/type.
7,000 grains of powder in a pound. $33/lb for CFE Pistol or $37 HS-6, just two random 9mm powders. Let’s call it $35 for 1 pound… so doing the math:
7 grains / 7,000 = 0.001
0.001 x $35 = $0.035 for the powder component of the round.
Total price of the round based on the above retail prices:
Brass (0.20) + Bullet (0.15) + Primer (0.08) + Powder (0.035) = $0.465
So the PERCENTAGE that the powder makes up in a 9mm round is approximately 7%.
Now keep in mind these are retail prices. Manufacturers obviously buy in huge quantities. I’m just using this as an example to get to the percentage price increases. Also I’m just using one caliber, large capacity rifle calibers would obviously use more powder, but the percentage might be similar because the bullet and brass are also more.
Reloaders feel free to chime in if my numbers are way off or not.
So now that we’ve established that the total powder percent is around 7% of the case cost in my example. If the price of powder DOUBLED that would mean the individual cartridge price would increase by 7%.
Hmmm, based on the prices we’ve been seeing of eggs, gas, housing and everything else increasing, a 7% doesn’t seem like a SUBSTANTIAL increase in the cost of ammunition.
So are these tactics more scare tactics to get people to buy ammunition?
I think so. At least to Vista’s credit they listed the percent increase expected in their letter to distributors. Here it is, and note the percentages:
- Shotshell: 1-7 percent
- Rifle: 1-7 percent
- Handgun: 1-5 percent
- 22LR/Shorts: 1-5 percent
- WMR/HMR: 1-7 percent
- Primers: 5 percent
- Alliant Powder: 10 percent (limited availability).
Whoa! You mean we actually backed into the right percentage with our little thought experiment. So that means that Vista’s cost of powder is expected to increase somewhere from 10 to 100% but they don’t know so they left a wide margin for the increase of 1-7% (rifle / shotshell) which uses more powder and 1-5% for pistol and 22LR which uses less.
Now let’s get back to the scare tactics used here and why they could be doing it.
Vista is in the process of selling off all of its ammunition brands to Czechoslovak Group (CSG) (who also own Fiocchi by the way) for $1.91 Billion (5x estimated 2024 EBITDA).
I’m not going to go into theories that they want to do this for gun control reasons, this is business after all and you don’t spend billions of dollars to shut companies down or NOT sell to your largest market (the USA). When people mention that to me, I feel the need to set them straight.
However if you know anything about finance, a small increase in EBITDA (Earnings before Interest, Taxes, Depreciation and Amortization) could mean a large increase in the eventual sales price that Vista can get for its ammunition business from CSG. Assuming of course they can renegotiate the price based on increased sales in 2024, but that is probably a stretch.
So when you look at this deeply (including the 556 shortage rumors from a few months ago) these online outlets are using a lot of scare tactics to get gun owners to panic buy.
In a way, the ammunition market is a lot like the stock market. Other people profit when you panic. Panickers always lose. It is better to be consistent in your buying (ie: dollar cost average) and of course buy more when the price is low (if you have extra funds).
That is where AmmoSquared shines - our "set it and forget it" ammo buying approach lets you set your budget and buy rounds based on the current market. When prices are low, you buy more and when prices are high you buy less. In other words, dollar cost averaging your ammo buying. On top of that, consistently buying small amounts while you wait for the best deals, is a way to always ensure you have ammo when you need it.
This is why I HATE seeing blogs, news articles and social media posts designed to get people to panic buy. I try to research and dispel them whenever possible like the 556 scare I analyzed and dispelled in October.
We all have enough on our plates that we don't need the gun industry participating in scare tactics to get us to buy ammo. Instead if you have a plan and stick to it, over time you come out ahead and can confidently avoid panic buying in the future.