Australian businessman Dick Smith is refusing to remove a label on his company's beetroot tins that say the New Zealand-grown product is inferior to that grown in Australia.
The label targets a competitor, Heinz, and its decision to move its beetroot processing facility from Australia to New Zealand in order to reduce costs.
Dick Smith Foods has retaliated by producing cans of Australian-grown beetroot, with labels saying "we are fighting back against poor quality imported product.''
Mr Smith believes Australian farmers who used to grow beetroot for Heinz should have been supported and not dumped for cheaper labour in New Zealand.
American-owned Heinz has demanded that cans of Magnificent Australian Sliced Beetroot be relabelled and has threatened legal action.
But Mr Smith is refusing to back down, and told Radio New Zealand's Morning Report programme on Thursday that New Zealand farmers should also beware.
"Just as the Aussie farmers have all been dumped and got thrown out of their jobs and all the beetroot processing is all being closed down by Heinz here, that will happen to you next. You'll never be able to compete with China or Swaziland or South America."
Mr Smith says he is prepared to go to court, though he acknowledges the risk drawn out and expensive legal proceedings may bankrupt him. He is now waiting for a further response from Heinz.
In a statement on Thursday, Heinz-Watties spokesperson Andrew Hewett says Dick Smith forwarded a private letter from the company to the media to gain free publicity.
In the letter, the chief executive of Heinz says Mr Smith's allegations are false and asks him to retract them. Mr Hewett says Heinz stands by the quality of its beetroot and will resolve the dispute with Mr Smith privately.
Meanwhile, a local produce manufacturer on Thursday dismissed Dick Smith's claim that the quality of New Zealand beetroot is inferior to what is grown in Australia.
McCains manager Mike Flynn describes the allegation as a joke, saying his company monitors the quality of Australian produce, and in comparison Hawke's Bay-grown beetroot is second to none.
The climate and quality of soil in New Zealand attracts produce manufacturers, such as McCains and Heinz-Watties, he says.