Err, sort of. The taste tests were flawed (and also the reason Pepsi repeatedly won blind taste tests over Coke around then as well).
New Coke was designed to be more Pepsi-like in that it was sweeter. In smaller quantities, people readily preferred the sweeter of the two drinks, whether it was New Coke vs Coke Classic or it was Pepsi vs Coke Classic. But what the taste tests overlooked was that people preferred Coke Classic to either New Coke or Pepsi in larger quantities (e.g. a 12oz can).
Without knowing the exact design of the test it's very difficult to be certain, but also from the linked Wikipedia article:
Goizueta publicly voiced a complaint many company executives had been making in private as they shared letters the company had received thanking them for the change in formula, that bashing it had become "chic" and that, as had happened in the focus groups, peer pressure was keeping those who liked it from speaking up in its favor as vociferously as its critics were against it. Donald Keough, the company's president and chief operating officer, reported overhearing this exchange at his country club outside Atlanta:
"Have you tried it?"
"Yes."
"Did you like it?"
"Yes, but I'll be damned if I'll let Coca-Cola know that."
...
Gladwell reports that other market researchers have criticized Coke for not realizing that much of its success as a brand came from what they call sensation transference, a phenomenon first described by marketer Louis Cheskin in the late 1940s: tasters unconsciously add their reactions to the drink's packaging into their assessment of the taste. For example, one of the researchers told Gladwell that his firm's research had found 7-Up drinkers offered a sample from a bottle with a distinctly more yellowish label believe the flavor to be more lemony, although it wasn't.
...
Coke considered but rejected gradually changing the drink's flavor incrementally, without announcing that they were doing so. Executives feared that the public would notice and exaggerate slight differences in taste. In 1998, Joel Dubow, a professor of food marketing at St. Joseph's University, tested this "flavor balance hypothesis" and argued that it was not true. He and fellow researcher Nancy Childs tested mixtures of classic Coke and Coca-Cola II and found that the gradual changes of taste were not noticed by a significant number of tasters. Coke, he said, would have succeeded had it chosen this strategy.
I'm not at all convinced the primary issue with New Coke was taste-based, from the available information.
I don't know how New Coke was, but I can tell the difference between Coke and Pepsi any time. I could even tell you when you're giving me a mix between the two.
I prefer Coke Cola as I indeed drink larger quantities, but my wife prefers Pepsi. And I don't mind Pepsi, but when I tried Pepsi Blue, the taste was so awful it was nauseating, although I did like the commercial. And if they gradually migrated old Pepsi to Blue, I don't know if I would notice what's going on, but I would stop drinking it.
I never said it was taste based, but the taste (better or worse) was part of the issue. The primary issue was they were abandoning the brand they had spent 100 years building up. But that brand was linked to the original taste, and throwing out that taste was a bad idea. The issue was not that the taste was horrible, but that it was different.
New Coke was designed to be more Pepsi-like in that it was sweeter. In smaller quantities, people readily preferred the sweeter of the two drinks, whether it was New Coke vs Coke Classic or it was Pepsi vs Coke Classic. But what the taste tests overlooked was that people preferred Coke Classic to either New Coke or Pepsi in larger quantities (e.g. a 12oz can).