SUPERMARKET giant Coles has launched a ruthless new campaign to strip profits from struggling suppliers.

A new management team recruited from UK supermarket chain Tesco has been blamed for the profit grab, which has seen Coles axe some branded lines that compete with its own private labels.

Suppliers have also hit out at Coles for giving itself a "prompt payment rebate" of 2.5 per cent off what it pays suppliers, even though, they claim, payments are rarely on time.

They also say Coles is demanding big increases in payments for shelf space, playing cheap, low-quality imports off against local companies to force their prices down and asking suppliers to take a big hit on payments to subsidise the refurbishment of Coles' stores.

Coles this week rejected the "wild" accusations from some of its suppliers, who claim its new management's strategy is designed to make it more attractive for owner Wesfarmers to sell.

But a food manufacturer that deals with local farmers, who asked not to be identified fear of the repercussions, said the new management had been "ruthless", demanded "premium product for Chinese prices" and played several "tricks" during negotiations.

Forced under contract to supply Coles' private label line for almost nil profit, the manufacturer relied on Coles keeping its branded product in its stores to maintain a margin.

But Coles pulled the supplier's brand, leaving it with "almost nothing" for supplying house brands.

"We employ more than 100 people and we're close to the wall, largely because ... retailers haven't done us any favours," the manufacturer said.

"As long as they make their margin, the customer gets rubbish and loyalty to Australian manufacturers is non-existent."

Coles wanted to enter a "partnership" that slashed the price paid to the supplier by a double-digit margin, which was greater than the supplier's profit in most cases.

The supermarket said the "partnership" was to pay for refurbishing its stores.

A Coles fresh produce supplier said Coles had been "aggressive" since UK management had taken over.

"The easiest way for big business to turn a quick profit is to take from suppliers and (increase) the margins," the supplier said.

Coles had informed him it would award itself a 2.5 per cent rebate for payments made within a week of delivery.

Payment within seven days "doesn't seem to happen ... but the discount always comes off", the supplier said.

Former supermarket buyer and farmer advocate Richard Bovill said some Tasmanian suppliers had refused to continue working with Coles, while others were finding the retail giant "difficult to deal with".

Supermarkets and other large companies used a business model which captured the entire business of a farm or small business and then "milked that for all it's worth", he said.

The supermarket then exploited the total dependence farmers had on its business for their livelihood, he said.

"If you've built to the scale that allows you to deal with Coles and Woolworths, you're totally dependent as you've got nowhere else to go," he said.

A source at a large consumer company said one of its major lines was discontinued after refusing to accept a massive increase in fees for shelf space and a host of other unreasonable demands.

"Management from the UK has been the driver," the source said.

A Coles spokesman said the chain sought to "strike a balance between paying sustainable prices to suppliers, and ensuring customers get the best possible prices in our stores".

"However, Coles also deals daily with large multinational food and grocery suppliers, who often seek to push price increases on to our customers that we do not believe are always justified," the spokesman said.

"While we don't apologise for seeking to get a better deal for our customers from these global food giants, we reject the wild and anonymous claims."