A price tag of £11bn has been placed on Sainsbury's following the disclosure last week that a CVC, KKR and Blackstone consortium was considering an offer.
Should this trio, or any other private equity bid, succeed, the new owner of Britain's third-largest supermarket would be keen to increase profit margins at the expense of suppliers, said a senior source at one major food manufacturer.
"Private equity does not invest for the sake of its health - it will be buying Sainsbury's to sell it, not to run it," he said. "And suppliers will be right at the very top of the list when it comes to measures to boost profit margins. Chief executive Justin King has already addressed costs so there's no doubt private equity will try to squeeze suppliers."
Another supplier said: "If private equity gets its hands on Sainsbury's, you can be pretty sure prices will come down. It cannot afford to differentiate on quality. Highly competitive pricing will be vital to its strategy."
Last year, after private equity vehicle Violet Acquisitions bought Somerfield, one of its first actions was a cull of suppliers as a way of getting better terms from those that remained.
One supplier added it was inevitable Sainsbury's new owners would be looking to extract better terms. However, he also warned that if Sainsbury's buyers did turn the screws, King's current strategy based on quality food would be threatened.
City analysts believe a highly leveraged takeover could leave Sainsbury's vulnerable to aggressive price cutting by rivals. "Tesco would see a key competitor being run for cash, and we would see Sainsbury's put under pressure on pricing, store openings, product development and service," said David McCarthy, retail analyst at Citigroup.