New figures show that the value of the grocery market declined by 5.2% to €3.1 billion during the 12 weeks to December 26 as the market faced a tough comparison against record sales in 2020.
But Kantar said that sales have grown by 10.9% compared to the same time in 2019.
A total of €1.1 billion went through supermarket tills during December alone.
This was just 0.6% lower than 2020's record-breaking figure, and an increase of €141m compared with 2019 and was equivalent to an extra €65 per household spend.
Kantar noted that an extra €3.1m was spent on Christmas dinner, with whole turkey sales up by €1.9m, but it also said that sales of Brussels sprouts dipped by 1.4%, with only three-fifths of Irish households taking them home this month.
Sales of other festive foods, including Christmas biscuits, cheese and confectionery, were €10.5m greater this year than last December
"Homegrown Irish brands were the order of the day and standouts included Brennans bread and Keogh's crisps, which saw sales rise by 6.6% and 34.3% respectively," Emer Healy, senior retail analyst at Kantar, said.
"People’s desire for a more luxurious Christmas also pushed up premium own label sales to a record-breaking €58m over December, €604,000 more than in 2020," she added.
As usual, December 23 was the busiest shopping day of the year with people spending a combined €81.6m on their final shop before Christmas.
"Despite concerns about supply chain issues and inflation, consumers were confident that retailers would have fully stocked shelves and they left much of their food shopping until the final few days, Emer Healy said.
"That boosted retailers over the festive trading period and all the major grocers were in year-on-year growth over the four weeks to 26 December," he added.
Meanwhile, take home alcohol sales fell by 22.9% in the 12 weeks under review, though they were up by 6.7% compared with Christmas 2019.
"Pubs were only open for three of the final twelve weeks of 2020, which resulted in unusually high sales of alcohol at supermarkets and independent shops. It was always going to be difficult to match that this year, but the numbers are still positive compared with pre pandemic," she said
No and low alcohol options had an even stronger performance as the value of the market rose by 12.2% over the year.
Online grocery sales continued their strong run at the end of the year.
Nearly 17% of Irish households purchased groceries digitally over the latest 12 weeks, with sales soaring by 9.3%.
Today's figures show that Dunnes retained the number one spot as Ireland's largest retailer in the 12 week period, securing 23.2% of the market.
SuperValu and Tesco were both close behind, with shares of 22.2% each, while Lidl and Aldi accounted for 11.7% and 11.6% respectively.
Meanwhile, similar data from NielsenIQ shows that overall Irish shoppers spent €28m more during Christmas week in 2021 compared to 2020.
Their report suggests that this growth was down to a longer lead up to Christmas Day as it fell on a Saturday this year, coupled with curtailed out of home celebrations as Omicron infections began to rapidly spread across the nation.
It reveals that the standout category performer in terms of value growth this Christmas was confectionery - including soft drinks, crisps and snacks, chocolate and sweets - representing 47% of incremental sales.
Overall, Irish shoppers spent €12m more on this category versus a year ago.
Health & Beauty also performed well fuelled by an increase in medicinal sales.
As Omicron infections began to spread, diagnostic tests added €1.5m to category sales this Christmas.
Despite Omicron fears, many returned to the pubs to toast an alcoholic beverage and as a result, take-home alcohol sales saw a value decline of 5% compared to Christmas 2020.
The decline was mainly driven by lager sales, which were down €6m compared to the previous Christmas.
Champagne and sparkling wine sales were down by 3.8%.
No and low, alcoholic drinks was the only segment to grow within alcohol, up 26% compared to Christmas 2020.
This coupled with the strong growth in soft drinks indicates that many Irish consumers chose to have a less boozy Christmas this year.