The meeting was intended to resolve the growing conflict over supermarket own-label products whose design and packaging bear a close similarity to those of their branded rivals.
Last month J Sainsbury agreed to change the packaging of its own-brand Classic Cola after Coca-Cola accused it of copying its own product's design.
But plans for a secret reconciliation dinner next week for four leading branded-goods makers and Britain's top supermarket chains have fallen through after the retailers attempted to impose conditions before the talks.
It is understood that the supermarketeers, led by Sainsbury, demanded that brand-owners stop lobbying for new laws against copycat products.
'The retailers didn't want to show any weakness over the issue and felt there were no grounds for negotiations unless the manufacturers dropped their campaign,' a source said.
The dinner was to be hosted by Eric Nicoli, chief executive of United Biscuits (Holdings), the McVitie and KP Nuts company. Invitations were sent to George Bull and Peter Blackburn, his counterparts at Grand Metropolitan and Nestle UK, and Sir Michael Perry, chairman of Unilever.
The retailers were to be represented by David Sainbury, Sir Ian MacLaurin of Tesco, Archie Norman of Asda Group and Sir Alistair Grant of Argyll Group.
News of the failed peace initiative comes as 30 leading manufacturers meet tomorrow to form a brand-owners' group with financial backing to campaign for unfair-competition law banning copycat products.
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