Milo's 4.5-star rating is set to be dropped, with Consumer NZ saying the malt-chocolate flavoured powder is almost half sugar.
It's a move applauded by health experts, with one calling the star system "confusing and misleading".
Milo is advertised as having health benefits, and Nestle maintains the health star rating is within guidelines.
But it's decided to withdraw the rating from Milo powder, pending the outcome of a Government review of the system, to reduce the risk of damage to a system the company supports.
So how did Milo get a high star rating in the first place?
The ratings are calculated on a series of nutrients. Good stuff like fibre and protein can offset the sugar, saturated fat and salt.
"It was about what you add to the product, not the product itself," Healthy Food Guide editor Niki Bezzant told The AM Show.
"The star rating was based on adding trim milk to the Milo.
"It makes the system a little bit annoying for people and it was one of those anomalies in the star system which really really needed to be addressed."
But Consumer NZ head of research Jessica Wilson told Newshub most people don't use trim milk with the product.
"On its own the powder would only qualify for a 1.5-star rating."
Ms Bezzant says a product that's nearly 47 percent sugar "is not a healthy product" - but says there are misleading claims on food labels "all over the place".
"You see things that say no added sugar, things that say no refined sugar and this is all quite confusing."
The star system doesn't help with the confusion, Ms Bezzant says.
"There are some cereals which are quite high in sugar but they've got higher stars because of other things that are in the product, so there's that kind of thing. They can manipulate the system a little bit.
"From the research I've seen, I think that people are not really necessarily understanding how to use it."
Ms Bezzant thinks "it's possible" Milo made money from having a 4.5 health star rating.
"And if you look at Milo really, it's a product that was invented in 1937 I think. So it's an old-fashioned product in a way.
"Just have it as a treat."
A five year review of the star ratings system is underway.