Milo powder is losing its 4.5 health-star rating.

It will drop down to 1.5 stars, Consumer NZ announced.

The product - which is 50 per cent sugar - was given a high rating based on the drink being made with skim milk.

"It's the skim milk that boosts the number of stars. But our research found most Milo drinkers prepare the drink with standard blue top or full-cream milk," Consumer NZ chief executive Sue Chetwin said.

The 4.5-star rating will disappear from Milo powder 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 the added ingredients, such as skim milk, rather than just the product itself.

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.

Consumer NZ had been campaigning to get rid of the "as prepared" loophole, Chetwin said. Ratings should instead be calculated on an "as sold" basis, with the exception of products that need to be drained or reconstituted with water.

Consumer NZ also wants caps on ratings for products high in sugar, saturated fat or sodium.

Milo was given a Bad Taste Food Award by Consumer NZ in 2016.