William Chase: Potato farmer who struck gold

It's not often your nostrils are assaulted by the overwhelming stench of booze when you enter a company's headquarters. But when you open the door to William Chase's office, it's as if you have walked into a distillery. And that's because ... you have.

Chase, the 46-year-old entrepreneur behind Tyrrells Potato Crisps, has swapped posh snacks for even posher £38-a-bottle potato-based vodka.

"When I was working on Tyrrells we had tonnes of rejected small potatoes we couldn't use, so I was looking for something to use them for, and I thought of vodka,"he says in the company's makeshift boardroom, at the heart of the distillery overlooking fields of those Herefordshire potatoes.

But the vodka idea was put on ice until Chase sold Tyrrells to a private equity outfit, Langholm Capital, for almost £40m in 2008. Chase says he did not sell out to collect a big cheque, but because the business was getting too big and was no fun any more.

Notably, Chase had refused to allow Tesco to stock Tyrrells crisps because of fears it would undermine the brand. "They [Tesco] wanted to sell them at the same price as Walkers and I wanted to keep the price of Tyrrells high,"he says. "Tesco told me to get back on my tractor and do what I do best and leave the 'grown-up retailing' to them."

So he did. And for years he ignored competitors' bids to buy him out until Langholm Capital offered him "an awful lot of money". "I'd never made any money in my life before,"he said.

So what did Chase, who was declared bankrupt at 29, spend the money on? "Well, I had just got divorced, so my ex-wife got 40% of it,"he says. Then he paid off all his debts and spent £3m building the distillery, including £900,000 on the world's tallest copper distillation column.

"But when I'd sold Tyrrells it was almost worrying, because you don't know what you've got until you haven't got it any more. You've got to have something to get you out of bed every day."

So does that mean he is never going to sell Chase Vodka? "No, I won't sell it. There's no profit there, so I don't think anybody would want to buy it,"he says with refreshing honesty.

He adds that the only reason Langholm bought Tyrrells in 2008 was because the banks were "daft enough"to lend them the money. "We were quite lucky [with the sale] … It was good timing,"he says. "As soon as [the economic collapse of] Iceland happened, there was no more money."

The distillery is shipping 5,000 bottles a week at up to £38 each, more than triple the price of its lower-cost competition. Surely that must translate to a pretty hefty profit margin? Apparently not, Chase says. Each bottle costs £18 to make, including tax, and he complains that most of the margin is sucked away.

"There are five people between us and the retailer, and each of them takes their cut,"he says. "The profits get sucked out. After three hard years we're only turning over £2m-£3m a year, we're just about to start breaking even and are targeting a 10% profit margin this year.

"It's not bad,"he adds. "About 250 vodka brands are launched each year and only about three of them survive."But he admits if he had known it would be so hard to get the business off the ground, he "wouldn't have done it. I would've set up a little still [distillery] as a hobby."

He complains that the drinks industry has made it very hard for new brands to find their way behind nightclub bars and on to supermarket shelves. Drinks companies are told to pay thousands of pounds to be included on nightclubs' drinks menus, he says, and even more to be included in special promotions.

Given the difficulty of getting into bars, clubs and supermarkets – despite Chase Vodka having scooped the top award at the 2010 San Francisco World Spirits Competition – is Chase prepared to stick to his line on Tesco? "I'll sell it to Tesco,"he says. I'll sell to anybody if they're interested."