Milo's 4.5-star rating is set to be dropped, with Consumer NZ saying the malt-chocolate flavoured powder is almost half sugar.
Healthy Food Guide editor Niki Bezzant told The AM Show that the star system "confusing and misleading".
"The star rating was based on adding trim milk to the Milo,” said Ms Bezzant.
Milo is advertised as having health benefits, and Nestle maintains the health star rating is within guidelines.
Just have it as a treat.
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.
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."
Watch the full interview with Niki Bezzant above.
The AM Show with Duncan Garner, Amanda Gillies and Mark Richardson, weekdays 6-9am on RadioLIVE and streaming live to the rova app on Android and iPhone.