Australian businessman Dick Smith has blamed Aldi's "extreme capitalism" for the demise of his food business which he says is closing in order to avoid bankruptcy.

Key points: Dick Smith blames Aldi for company's demise

Dick Smith blames Aldi for company's demise He says his business could not compete with the German food giant's "extreme capitalism"

He says his business could not compete with the German food giant's "extreme capitalism" Aldi Australia CEO said the company employs 11,500 local people

Dick Smith Foods, which has 13 products including a range of spreads, tomato sauce, and cereal, will be phased out over the coming months.

The entrepreneur's voice shook with emotion and he fought back tears during a media event in Sydney.

"Today is really a wake. I've been outmanoeuvred," he said.

"I said I would keep your jobs and I couldn't."

Mr Smith, the 1986 Australian of the Year, released a five-page email as part of the event in which he thanked industry heavyweights for their two decades of support.

In it, the 74-year-old complained companies that supported Australian workers and produce could not compete with German supermarket giant Aldi — who he accused of building their success on "extreme capitalism".

He claimed Aldi — which in research agency Roy Morgan's latest survey was ranked as Australia's most trusted brand — exploited cheap labour overseas to keep costs down.

Mr Smith claimed the company used its networks in cheaper markets to keep costs down, and said that meant Australian producers suffered.

"It looks as if there is nothing we can do about this," Mr Smith wrote in his email.

However, in a statement Aldi Australia CEO Tom Daunt dismissed that, saying the business employed 11,500 Australians and partners with more than 1,000 local suppliers.

He did not reference the company's imported products in his statement, but did say the company wanted to keep items on the shelves "affordable".

"At Aldi we strive to provide our customers with high-quality products at affordable prices. Losing focus of this purpose just adds costs," he said.

He said the company had started from humble beginnings in Australia, with two stores opening 17 years ago.

"We are proud of the reputation we have built and feel strongly that the recognition we have earned as Australia's most trusted brand is a result of our commitment to openness, honesty and integrity in all our dealings," Mr Daunt said.

Aldi operates more than 500 stores in Australia. ( ABC: Charlie McKillop )

End was 'inevitable'

Mr Smith rose to business prominence with the successful retailer Dick Smith Electronics which he founded in 1968.

Woolworths took full ownership of the chain in 1982, before selling it to Anchorage in 2012. It entered voluntary administration in 2016.

"It is my melancholy duty to inform you that the decision has been made to close Dick Smith Foods Pty Ltd," he wrote in the email.

He said he had created about $480 million for Australian farmers and processors, and given more than $10 million to charity.

"In recent times, the only way we have been able to achieve sales at an acceptable level (that would allow our products to have shelf space) is by discounting so much that we are often losing money," he wrote.

The email was sent to the managing directors of Coles and Woolworths, as well as Jeff Adams, the CEO of grocery marketing and distribution company Metcash.

"Now that I have made the decision to close Dick Smith Foods, we will be winding it down over the next 12 months," he said.

"Yes, at the present time the company is successful and viable. However, it is clear that this will not go on forever, so I have made the decision before the inevitable takes place and we are forced into bankruptcy."