Sainsbury's has pipped Asda to the post to become Britain's second-largest supermarket chain.
Sainsbury's now has 16.9 per cent of the market, according to the latest data from Kantar Worldpanel.
Shoppers also flocked to discounters Aldi and Lidl, with over half of British households paying one of the two a visit at least once in the 12 weeks to 4 January.
While upmarket supermarket Waitrose and the discounting rivals made progress, the UK's big four chains - Tesco, Sainsbury's, Morrisons and Asda - all saw their market shares drop in the last three months.
Runner up: Sainsbury's has pipped Asda to the post becoming Britain's second largest supermarket behind Tesco in terms of market share
Tesco remains on top in terms of market share, holding 29.1 per cent in the 12 weeks to 4 January 2015, although this was down from a 29.6 per cent share the previous year.
As runner up, Sainsbury's holds 16.9 per cent of the market, compared to 17.1 per cent at the same time the previous year.
'Given the seasonal nature of this share increase there is a high likelihood that Asda will retake the number two spot later in the year.'
Walmart-owned Asda's share of the market fell slightly to 16.8 per cent and Morrisons' eased to 11.3 per cent, marking a small drop from the previous year.
Sharing the market: Tesco still has a 29.1 per cent market share in the supermarket sector
Signs of the ever-increasing influence of discounting supermarkets were also apparent, as Aldi and Lidl saw their share of the supermarket sector rise to 4.8 per cent and 3.5 per cent respectively.
More than half of all British households visited at least one of the two firms over the 12 week period which included the festive season, Kantar reported.
Consumer demand for quality also held firm as upmarket food retailer Waitrose saw its share of the market increase by 0.3 per cent to 5.1 per cent.
The Co-operative saw its share of the market fall back slightly to 5.9 per cent, while Iceland's remained steady at 2.2 per cent.
In terms of how much shoppers are paying for goods, prices were 0.9 per cent lower on a like-for-like basis in the period due to lower commodity costs and the continuing supermarket price war, Kantar said.
Hefty price reductions encouraged shoppers to spend a little more over the Christmas period, Kantar said, with the overall grocery market up 0.6 percent in the 12 week period.
Fraser McKevitt of Kantar Worldpanel said: 'Shoppers chose to buy a little bit more this Christmas compared with last year, a trend which has pushed sales growth up to 0.6 per cent. This is low in historical terms, but a rally for the supermarkets compared with recent months.
'Shoppers were the big winners at Christmas with cheaper grocery prices encouraging them to spend more at the tills. Like-for-like prices have fallen by 0.9 per cent due to lower commodity costs and an ongoing price war which has continued as the large retailers battle for market share'.By Jane Denton for This Is Money