According to officers, the 53-year-old man planned and carried out his scheme "alone".
Officials in the city of Konstanz say that the threatening email was sent to unspecified food retailers.
Police have nevertheless alerted people buying groceries to be aware of suspect packaging which may have been tampered with.
On Thursday, officials launched an urgent appeal and published CCTV images of the suspect - sparking hundreds of calls from the public.
The unnamed man, 55, was taken into custody on Friday evening in the Tübingen area south of Stuttgart. He said he could not give further examples, however, because he didn't have the suspect's record.More news: Will Trump Fire Tom Price? President Upset by Health Secretary's Private Flights
The blackmailer alerted authorities that five jars of baby food at shops in Friedrichshafen, near Konstanz, had been tampered with.
The suspect, who as of Saturday had not confessed, faces 5 to 15 years of jail time for extortion under threat of force.
Earlier this month, police received an emailed threat to distribute 20 types of poisoned foodstuffs into supermarkets across Germany and overseas if they did not pay a sum believed to top €10 million ($12 million).
The food - which had been laced with ethylene glycol, a chemical found in anti-freeze and brake fluid - was found and removed. The substance can cause kidney failure, brain damage and death. Police are seeking one man seen on camera.
While initially, they were unsure whether they had the right man, German police said Saturday that they believe they have arrested the food store extortionist. He left the store before they could stop him.