Diageo has moved to streamline its European operations with the creation of a single business unit for continental Europe.

The UK drinks giant said today (14 July) that it was merging its hubs in northern and southern Europe to create a new operating unit called Continental Europe. Diageo said markets in Iberia and Russia would not be covered by the new organisation.

Diageo Europe president Andrew Morgan said: "As we have repeatedly told the market, our Europe business continues to operate in a challenging economic and regulatory environment.

"In further simplifying our organisation structure and creating a single 'Continental Europe' hub, we will be able to serve our customers and consumers even more effectively, and so unlock the fullest growth potential that exists today."

In a trading update earlier this month, Diageo warned that European markets remained "subdued" and blamed increased regulation on the continent for hitting alcohol sales.

The picture in Europe remained mixed for Diageo with a slowdown in Spain's Scotch whisky market and problems with the introduction of a new duty regime in Russia offsetting gains made by Guinness in the UK and J&B Scotch in France.

The new unit will be based in Paris and headed by Gilbert Ghostine, the managing director of Diageo's business in northern Europe. Stephanos Theodorides, MD of Diageo's South and East Europe hub, has decided to leave the company, despite being offered new positions throughout the company.

A Diageo spokesperson said the impact on jobs would be "minimal". The move, she added, was "categorically not about headcount or cost-savings".