If you prize convenience when it comes to coffee but don't like instant coffee, capsules or pods may be an attractive middle ground. We put five different Nespresso-compatible coffee pods to the test to find out which tastes best and which offers the best value for money.

Looking for our unbiased, expert comparisons? See home espresso coffee machine reviews.

CHOICE taste test

We invited three coffee experts to taste test capsule coffee made in a DeLonghi Nespresso Citiz & Milk machine. The tasters blind-sampled a shot made from a Nespresso capsule and four different Nespresso-compatible capsules. For comparison, we also included a shot made on a manual espresso machine from freshly ground Campos Superior Blend coffee beans.

Each shot was assessed for crema thickness, colour, aroma, mouth feel and aftertaste. The general consensus was that coffee pods and capsules lacked flavour and tended to have an artificial or plastic tang.

The results

In order from best to worst:

Campos Superior beans

Campos Superior Blend Coffee Beans

(The fresh coffee)

43c per 8g coffee*

Comments: "Deep, smooth flavour", "caramel aroma", "well-rounded mouth feel" but "slightly sour aftertaste".

Coffee Capsule Delights Indian pod

Coffee Capsule Delights Indian Flavour

60c per 5.8g coffee*

Comments: "Good aroma", "nutty", "no bitter aftertaste", but "a very limited flavour".

Bestpresso Mercurius Intenso Flavour

58c per 5.6g coffee*

Comments: "Impressive crema" but has a "burnt taste" and "stale aftertaste".

Piazza D'oro Superiore Flavour

Piazza Doro Lor Espresso Superior pod

65c per 5.5g coffee*

Comments: "Strong flavour – fairly well-rounded", "no unpleasant aftertaste", but "it tastes like instant coffee" and "has an artificial taste".

Nespresso Roma Flavour

Nespresso Roma pod

68c per 5g coffee*

Comments: "No bad aftertaste", but "it's underwhelming", "musty" and "watery".

Caffé Vergnano 1882 Intenso Flavour

55c per 5.3g coffee*

Caffee Vergnano Espresso 1882 Intenso pod

Comments: "Even colour", but "it's flat", "stale" and has "a medicinal aftertaste".

*Prices are from April 2013.

Meet the tasters

(L-R) Scott Robertson, Master roaster at Double Roasters in Marrickville, Sydney.

Fiona Mair, CHOICE home economist with eight years' coffee-tasting experience.

Benjamin Stronach, independent barista trainer and coffee roaster.

Like your coffee strong?

For fans of a strong espresso, capsule coffee can be insipid. This could be due to the smaller amount of coffee in the capsules: the weight of coffee in each capsule we looked at ranges from 5g to 5.8g, while the traditional amount in an espresso is 7g. Baristas commonly serve up an 11g regular espresso or a 22g double.

Machine compatibility issues

With the speedy growth of the market in Australia, there has been a proliferation of capsule machines and suppliers in supermarkets and online. As the vigorous discussions on online forums demonstrate, consumers can be very confused about which capsules fit which machines. For instance, the Aldi Expressi accepts Map and Woolworths Select capsules, but Aldi capsules don't work with the Map or the Woolworths Caffitaly machines.

Mixing and matching different brands of capsules in one machine can be problematic as each has a slightly different design, which can affect the coffee-making process and hence the taste.

If you don't like your barista's coffee you can go somewhere else, but once you've bought a coffee capsule machine you're stuck with the flavours compatible with that machine. If you can, try the coffee flavours in store before you buy.

Non-authorised Nespresso-compatible capsules are slightly different to the authorised Nespresso products, presumably to skirt around the patents. If you've forked out a few hundred dollars for your machine, be aware that, according to Nespresso, if a non-genuine capsule damages the machine or causes a malfunction, the machine's warranty won't be valid.

Coffee capsule history

The Nespresso capsule machine, made by Swiss confectionery giant Nestlé, sprang into existence in 1986 and was marketed to the office coffee sectors in Switzerland, Japan and Italy. In 2000 the first boutique opened in Paris, and in 2006 a marketing campaign using George Clooney's good looks saw the brand explode globally with annual sales exceeding $US1.8bn for the first time. By 2012 there were 300 boutiques in 48 countries.

Nestlé registered a formidable 1700 patents to cover its Nespresso capsules and machinery early on. But since 2010, competitors have been jostling for a foothold in the lucrative coffee market, exploiting a gap in the Nespresso patents. And it's no wonder – Nespresso products have a reported profit margin of 20–30%, and analysts have estimated a 47% market growth in single-serve coffees globally, taking sales to $US8bn in 2014.

Coffee capsule wars

The main tactic in the attack on Nespresso's market share is convenience and price. To buy Nespresso capsules online a customer must join the Nespresso Club; otherwise, non-members can purchase capsules at one of the 11 boutiques around Australia. The minimum online order is 50 capsules for 68c each, and unless you order more than 200 capsules, you'll pay a delivery fee, starting at $6 for 50 capsules.

In comparison, Nespresso-compatible Piazza D'Oro L'Or capsules are sold in Sydney supermarkets at 65c each. Other, less expensive Nespresso-compatible capsules can also be purchased online.

An entry-level DeLonghi Citiz Nespresso machine will set you back $369, but Aldi and Woolworths are now selling their own budget-priced non-Nespresso-compatible machines for less than $100.

Unsurprisingly, Nestlé has been very busy testing the rules around its patents, having launched a series of lawsuits against rivals that make Nespresso-compatible capsules, such as the Ethical Coffee Company and Sara Lee, the owner of the Piazza D'Oro L'Or brand. Nestlé, in turn, has been counter-sued by the Ethical Coffee Company, which claimed the Nespresso brand engaged in unfair competition practices and a "systematic smear" campaign against it. In an interesting twist, the CEO of the Ethical Coffee Company Jean-Paul Gaillard served as CEO of Nespresso from 1988 to 1998.

The results of the legal challenges have been mixed for Nestlé, and industry observers feel the company is fighting a losing battle. They point out, however, that the cost of litigation pales in comparison to the profits that can be made by holding competitors at bay for a couple of years.

While Nespresso faces off competition from cheaper products, it has one important advantage. Marketers call it "premiumisation" – the creation of a strong, high-end "exclusive" brand that inspires loyal customers who value the buying experience just as much as the product and are prepared to pay premium prices. Only time will tell whether loyalty trumps cost in the coffee capsule wars.

The cost of capsule convenience

The attraction of coffee capsules is convenience, consistency of taste and cost – compared to the high cost of a café-made espresso, a capsule can vary from just 37c for Aldi Expressi to 68c for Nespresso.

However, you'll pay a lot less per kilogram for your coffee if you make it at home on a manual coffee machine. For example, Piazza D'Oro coffee beans cost around $35/kg, its ground coffee costs around $50/kg and its coffee capsules work out at close to $120/kg.

The environmental cost

The cardboard boxes that the capsules are packaged in are recyclable – no surprises there, but the capsules themselves leave a much bigger environmental footprint. For a start, aluminium is an energy-hungry product, requiring nine times more energy to manufacture than steel. In Australia, Nespresso capsules need to be taken to specific collection points. But how many are actually being recycled?

In 2013 Nespresso said it collected "75% of all capsules sold worldwide". But while it may have collected 75% of the capsules, it doesn't say whether that many have actually been recycled. Nespresso has sold an estimated 28 billion capsules worldwide and counting – that's about 28 million kilograms of aluminum, much of which may be sitting in landfill.

Nespresso and other brands of capsules – which are mostly plastic rather than aluminum – generally can't be thrown into domestic recycling bins. They're too small for the machines at recycling plants to separate from other rubbish and simply drop through sieves into general waste. Piazza D'Oro and Caffè Vergnano also have an extra layer of plastic wrapping around their capsules.

It is possible to produce a more environmentally friendly capsule. The Ethical Coffee Company has created a vegetable-based biodegradable coffee capsule that is Nespresso-compatible and can be thrown straight into the compost. They aren't sold directly in Australia yet, but we found them online.