The 74-year-old entrepreneur Dick Smith will close his food business and phase out more than a dozen products including peanut butter, tomato sauce, and breakfast spreads.
Smith claims that companies that support Australian workers and produce can not compete with German supermarket giant Aldi – which he accused of building its success on "extreme capitalism".
He claims 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.
Smith said the company used its networks in cheaper markets to keep costs down, and said that meant Australian producers suffered.
Smith, the 1986 Australian of the Year, headed up the business for 19 years, offering locally sourced and owned alternatives to big-name food brands.
He released a five-page email as part of a media event this week, in which he thanked industry heavyweights for their two decades of support.
In his statement, Smith 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.
"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."
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.
In a statement, Aldi Australia CEO Tom Daunt was dismissive, saying the business employed 11,500 Australians and partnered with more than 1000 local suppliers.
