Nestle is removing its 4.5 health star rating from Milo powder after concern from Consumer New Zealand.
The consumer watch dog gave the product a Bad Taste Food Award in 2016, with chief executive Sue Chetwin saying it was 4.5 stars out of five for a product that was almost "50 per cent sugar".
The high health star rating was based on the drink being made with skim milk, however on its own the powder earned just 1.5 stars.
"It's the skim milk that boosts the number of stars," Chetwin said. "But our research found most milo drinkers prepare the drink with standard blue top or full-cream milk."
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Chetwin said the product packaging also featured pictures of active young sportspeople. The 4.5 star health rating would be removed from packages in June.
Health star guidelines let companies calculate the number of stars on an "as prepared" basis. This means a rating can reflect the nutritional components of added ingredients rather than just the product.
Chetwin said this rule undermined one of the main objectives of the rating system, which was to give consumers at-a-glance information about the nutrition content of a packaged food.
She said the company has been campaigning to get rid of the "as prepared" loophole and replacing it with an "as sold" basis.