Vista Outdoor on .22 Ammo: Demand Down, Supply Up, Price Down

Parts of Vista’s approach have worked well, such as investing in infrastructure and preserving market share, Metz said.

Vista recently debuted a new, 37,000-square-foot, $35 million rimfire ammunition plant near the Lewiston-Nez Perce County Regional Airport, which has resulted in what company officials describe as a “very satisfying” reduction in the time needed to complete an order.

“It pays dividends when you come out of the trough,” Metz said. “We’re able to make some changes in our facilities that will enable us to participate really strongly as the market returns.”

Vista Outdoor has reduced ammunition prices to maintain market share as its customers work through stockpiles they amassed under the administration of Barack Obama – when they feared new regulation that never came to pass.”We’re the market leader in rimfire,” Nolan said. “Brand preference in ammunition tends to be somewhat sticky. It took us a long time to gain our market share. … We are loathe to cede that during a period of challenging pricing because it’s going to be very difficult to get that back.”

 Ammunition manufacturers, such as Vista Outdoors, do not like to lower prices. As with any manufacturer, life is easy and smooth when both prices and demand are high. But the market does not guarantee that prices and demand will remain high. Only force, in the form of government enforced monopoly, or collusion, as with the OPEC cartel, can do that. Neither of those things exist in the United States, where competition and a mostly free market in ammunition, is enforced.

The CCI and Federal brands have an enviable reputation for reliability and quality. They have customer loyalty because of that.  Stephen Nolan is referring to that when he speaks of brand preference being “somewhat sticky”. But competition in a free market works. Aguila of Mexico saw an opportunity and almost doubled their production. They are working to grab some of the increased market in the United States. They are the current price leader.  But Vista Outdoors wants to keep its market share.  If you look at the current prices, Federal prices are just above Aguila’s.

I expect the prices to drop below the current lows of  3.7 – 4 cents per round.

If you look closely at the price on the old Remington box, it was purchased on sale at less than 2 cents per round.

I will not be surprised to see prices drop to that level, sporadically, at sales, before President Trump’s term ends.

©2017 by Dean Weingarten: Permission to share is granted when this notice and link are included.

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