The two lolly varieties have had their names changed to Red Ripper and Cheekies respectively.
Nestlé made the announcement on Monday, with the company saying it decided to change the names due to “overtones which are out of step with the company’s values”.
Nestlé General Manager Confectionery, Chris O’Donnell, said the company has an “unwavering commitment to upholding respect for our friends, neighbours and colleagues”.
“We hope Australians will support the evolution of these two much loved lollies – while the names are new, the lollies themselves remain unchanged,” he said.
“We will keep pack changes simple to help lolly lovers find their favourites easily.”
The word ‘redskin’ is a derogatory term used to describe Native Americans, while ‘chico’ means boy or kid in Spanish and is sometimes used as a slur against Latin Americans.
Nestlé is one of a number of companies to have changed product names after being pressured by activists amid heightened racial tensions and the Black Lives Matter protests.
Red Ripper and Cheekies will appear on shelf in early 2021.