Spirit giant Diageo has agreed a deal to snap up Herefordshire gin and vodka-maker Chase Distillery.

The takeover, for an undisclosed amount, will see the Tanqueray and Gordon’s owner further expand its UK gin business as customer demand for premium spirits continues to surge.

Dayalan Nayager, managing director of Diageo Great Britain, said: “We are thrilled to be bringing such a quintessentially British portfolio of high-quality, crafted brands into our family.

“We are excited about the growth opportunity within the premium plus segment and are very much looking forward to working with the Chase team to build on the portfolio’s considerable potential.”

It comes months after Diageo bought Ryan Reynolds-backed Aviation American Gin in a deal worth up to 610 million US dollars (£466 million).

Chase Distillery was founded by entrepreneur William Chase in 2008 and has a portfolio which includes seven gins, four vodkas and an elderflower liqueur.

The range of spirits is distilled from scratch using British-grown potatoes, apples and all-natural botanicals on Chase Farm in Herefordshire.

It will result in the latest major payday for Mr Chase, who also founded crisp brand Tyrells before selling a majority stake in the snack business for more than £30 million in the same year he started the distillery.

Mr Chase, founder and chairman of the company, said: “It’s inspiring to have Diageo invest in Chase Distillery’s future.

“They believe in the potential of our field-to-bottle spirits and will build on our mission to develop our sustainable distillery in Herefordshire.”

Earlier this year, Chase started working with advisers at investment bank Rothschild to explore strategic options for the company.

It is understood that Mr Chase is now keen to focus on his Willy’s Wellness brand, which produces gut health products such as apple cider vinegar and kombucha.