Kellogg's will not be allowed to promote sugary cereals in supermarket special offers, a court has ruled.
In-store promotions on food and drink high in fat, salt or sugar will be restricted under new rules for England.
Food giant Kellogg's had taken the government to court arguing the rules did not take into account the nutritional value of added milk.
But the Royal Courts of Justice ruled in favour of the government. Kellogg's said it was "disappointed".
"It makes little sense to us that consumers will be able to buy other products, like donuts and chocolate spreads, on promotion - but not many types of breakfast cereals," said Kellogg UK managing director, Chris Silcock.
The new rules were due to start in October but have been delayed by the government due to the cost of living crisis.
When they do kick in, it will mean foods deemed high in fat, sugar or salt will be banned from special offers and prime spots like checkouts, store entrances, aisle ends and their online equivalents.
Popular brands such as Crunchy Nut Corn Flakes and Fruit and Fibre are classified as high sugar in their dry form.
But Kellogg's argued including added milk would change the calculation by reducing the proportion of sugar and salt content relative to the weight of the overall serving.
The company said independent market data showed cereals were eaten with milk or yoghurt in 92% of cases.
But Judge Mr Justice Linden said Kellogg's cereals "do not come with instructions for preparation which say that they should be consumed with milk".
His judgement said he found no unfairness to Kellogg's and the public health case for the new rules was compelling, proportionate and rational.