Giant American food processing firm HJ Heinz is ramping up its attack on what it calls Australia's unhealthy food retail industry that encourages private labels and significant price cuts on basic goods.

The practice, according to Heinz chief executive William Johnson, hurts healthy competition and has caused the shutdown and downsizing of stores in New South Wales, Queensland and Victoria.

Johnson said the move forced Heinz to lay off at least to 346 workers to survive the unfair onslaught against its products perpetrated by local giant retailers like Coles and Woolworths.

"'We are confronting a combination of weak categories, relentless promotional pressure and growing private label, as well as executional issues ... and the reality on Australia almost come to the point that it's ... immaterial to us going forward because it has taken such a hit," the Heinz CEO was reported as saying on Tuesday by Business Day.

Johnson has been pinpointing tactics employed by Coles and Woolworths, which he said undermines competition in Australian retail and in the end could drive out foreign players from the sector.

Such a spectre, Johnson stressed, would in the long run deprive Australian consumers of choices in a market that he says has increasingly grown hostile to new players.

Apart from Heinz, Business Day has reported that other food manufacturers such as bread maker Goodman Fielder and dairy specialist Lion have raised grave concerns over the proliferation of the so-called 'home brands' that gradually ease out other food brands.

Both Coles and Woolworths offer in-house food brands that are priced lower against well-established brand names and their ploys were lumped with heavy discounting on milk, bread, eggs and oil, which suppliers said kill their businesses.

And the marketing technique, which brought considerable success to both Coles and Woolworths, will not see a letup anytime soon as Woolworths indicated in a statement that more private label goods will hit its supermarket shelves in the weeks ahead, in a run-up to the expected rush of more sales for the holiday season.

Woolworths justified its move by stating that sales records showed that Heinz's net profit is proportionally higher at 10 percent than that of the local retailer's, which stand at four percent by the latest figures.

Yet the numbers do not speak well for Heinz, Johnson pointed out, and the company is now looking to drastically adjust its Australian operations and discontinue some product lines if only to survive the present domestic retail industry.

The overall condition, however, is far from being alarming, according to former ACCC chief Bob Baxt, who asserted that by putting home brands on their shelves, supermarkets were not in any way violating competition guidelines.

"The use of private label is just another form of competition. ... As long as the labelling is not misleading ... I don't see anything wrong with private labels, in fact it's another way companies can compete and thus deliver benefits to consumers," he told Business Day.