The red clay and limestone marble deposits at Watcombe and elsewhere produced two local industries which blossomed and declined within a century. In South Devon, licences to excavate "red earth" go back to the 16th century. However, by the 18th and 19th, potteries were looking for ever whiter materials to emulate porcelain. (for example, ball clay at Kingsteignton).
When red clay was discovered in the grounds of Watcombe House in 1869, the owner, Mr G J Allen, realized its potential as he saw it was ideally suited for the manufacture of terracotta ware, which was becoming popular. At first the clay was sold to other parts of the country until it was decided to erect a pottery on the spot. Watcombe Pottery was thus established just at the right moment to meet the demand for the new fashion for Art pottery, which reached its peak between 1870 and 1900. The coming of the railway had allowed for the import cheaply of the coal needed to fire the kilns from the Midlands and South Wales. Its popularity was further enhanced when, in 1873, Queen Victoria "graciously consented to accept a pair of Watcombe water bottles as a birthday present from Baroness Burdett Coutts". The original decorators came from Staffordshire which explains the high standards of design which were achieved in the early days. During its existence Watcombe produced everything from terracotta angels to advertisements for soap. As well as hollow-ware, busts were produced in large numbers, including Dickens, Scott and Shakespeare.
Later, red clay was found at Hele in 1875 and the Torquay Terra-Cotta Company came into existence. Founded by Dr. Gillow, he was its first chairman. The clay was dug from a pit in the middle of the site and two kilns were later built near the Gas Works. In November 1875 temporary showrooms opened at "Coulman's Marble Works opposite the Cemetery". When the demand for unglazed wares declined, the Pottery made glazed pottery, some described as Crown Devon Ware. The original factory closed down, possibly about 1904 but reopened under the new ownership of Enock Staddon - it was now "Torquay Pottery". It continued producing a wide range of wares until 1939. By the end of the War part was a laundry (which remained in existence until the early Nineties).