DICK Smith has launched an extraordinary attack on Aldi, accusing the “greedy” and “ruthless” discount retailer of siphoning “hundreds of millions of dollars” to Germany.

In a scathing letter on Wednesday responding to Woolworths’ controversial decision to axe its deal with local fruit supplier SPC Ardmona, the outspoken entrepreneur pointed the finger squarely at Aldi.

“Don’t blame Woolworths for the SPC Ardmona disaster,” Mr Smith said. “Blame ourselves and capitalism as it gets to the limits of greed.

“Credit rating agency Moody’s are not stupid. They are actually spot-on when they stated that Aldi’s ‘maturing’ customer base spells big trouble for the established players. Nothing could be closer to the truth.

“It’s clear that Woolworths and Coles will have to either replicate Aldi, that is, move to around 90 per cent home brand products and reduce their product selection from over 20,000 to just a few thousand, while sacking most of their Aussie employees, or they will be sent into bankruptcy.”

The outspoken entrepreneur, who markets a range of Australian-made jams and spreads, hit out at Aldi for undercutting the rest of the market.

“There is absolutely no doubt in my mind that Aldi with its incredibly low overheads — they hardly employ any Australian staff — and its private ownership in Germany — they don’t have the high costs of public listing — will mean they will eventually send one or both of our Aussie shareholder owned food retailers out of business,” he said.

“Aldi is one of the smartest and most ruthless retailers in the world. Their greed is unlimited. Aldi Australia is now one-third the size of Coles and they haven’t opened in Australia for charitable reasons. They are here to eventually take hundreds of millions of dollars out of our country and repatriate this money to Germany.”

Mr Smith pointed out that SPC manufactured “Australian icon” IXL jam, which sells at 72 cents per 100g. The Aldi equivalent, Grandessa, sells at 28 cents per 100g, nearly one third the price, while its premium Grandessa jam, imported from Belgium, sells at 55 cents per 100g.

He said Woolworths had discontinued his Dick Smith’s Australian Grown strawberry jam because it sells at $1.61 per 100g, while the French imported equivalent, St. Dalfour, sells at $1.41 per 100g.

“Of course, as Aldi becomes more successful with lower and lower food prices Australians will become more and more obese with the associated health problems.

“And who will pay for that? Yes, Aussie taxpayers. Not the Albrecht family in Germany. And Australian parents, don’t think your children will have a ‘first’ job stacking shelves at your local retailer. There will virtually be no jobs, as the Aldi formula is designed for very low staffing levels.

“So don’t blame Woolworths or Coles and don’t even blame Aldi. It’s simply our system of extreme capitalism, with its need for perpetual growth. It will be so sad for our children.”

In a statement, an Aldi spokeswoman said Aldi had played an important role in the Australian community since its first store opened in 2001. She said 90 per cent of Aldi’s grocery range was private label, with the majority sourced from Australian manufacturers.

“We only source products from overseas when we can’t find the product, quality, efficiency or innovation we seek here in Australia,” she said.

“Each day, Aldi’s operations improve the livelihood of local businesses, create employment opportunities and deliver high-quality, locally made products to Australian families at permanently low prices.

“Aldi directly employs almost 10,000 people throughout our retail stores, distribution centres and corporate offices. In addition, over the course of the year we engage with more than 1000 suppliers, the majority of whom are Australian and have enjoyed growth and success as we have expanded.”

On Wednesday, Woolworths said it had decided not to renew its canned tomato deal with SPC Ardmona, although it was in discussions about volumes and prices of other canned fruit for the coming season.

Woolworths will instead source its tomatoes from another provider that sources them from the Murray Valley region in Victoria, and wouldn’t say whether it would stick to a five-year deal signed in 2014 for other home-brand canned fruit.

Woolworths said it remained committed to the “spirit” of the deal. That deal kept SPC Ardmona afloat and saved at least 500 jobs and guaranteed supply from farmers in 2014.

Victorian MPs said they wanted the supermarket to honour the five-year deal, with Premier Daniel Andrews saying companies like Woolworths should be buying local and supporting local jobs.

— with AAP