The confectionery and drinks giant is close to launching low-calorie versions of Maynard's Wine Gums and Bassett's Allsorts, while a reformulation of Dairy Milk to suit health-conscious consumers is at a very early stage.
The company will invest 66% more money into the reduced sugar and fat confectionery market by 2009, increasing spending from £78m to £126m on artificial sweeteners, flavourings and the reformulation of existing products into a low-calorie model.
However, Cadbury's total spend on research into new products is expected to amount to more than £500m over the next five years.
As part of Cadbury's attempt to create low-calorie versions of old favourites such as Dairy Milk, the company will produce its own new sweeteners as well as forming partnerships with third parties.
David Macnair, Cadbury Schweppes chief science and technology officer, said: "It's just about sweetener technology, but also how it is put into the product and encapsulated so that texture and flavour remain the same."
Sales in the reduced sugar and fat confectionery market grew from £11.1bn in 2005 to £11.8bn last year. Cadbury's market share currently stands at around 19.5%, while its rival Wrigley's commands a market-leading share of 20.7%.
Cadbury's said it would disclose details of its new strategy on June 19.