J SAINSBURY said customers still treated themselves to luxuries such as champagne over Christmas despite the pressure on household budgets as it claimed to have won the festive supermarket grocery battle.

Sainsbury's, Scotland's fourth-largest supermarket chain, posted like-for-like sales growth of 2.1% for the 14 weeks to January. This equates to around 1.2% after VAT is stripped out, according to analysts.

Extensions to its existing supermarkets accounted for between 1% and 1.1% of the rise, the company said, indicating that, in line with most rivals, Sainsbury's has seen sales fall in volume terms.

With the supermarket signalling that it doesn't expect to see much of an improvement in market conditions this year, its shares sank 4.3p or 1.4% to 301.6p.

In contrast to rival Wm Morrison, whose chief executive Dalton Philips this week said shoppers had switched from buying champagne to cheaper sparkling wine over the Christmas period, Sainsbury's said its champagne sales were up 10% on last year.

The store chief executive Justin King said customers had managed their budgets carefully in October and November "so they could still enjoy special occasions" like Christmas.

This leaves the company hopeful that the Queen's Diamond Jubilee and London Olympics will provide sales opportunities this year.

Mr King said it was "another Christmas win for Sainsbury's", a claim supported by sales data published by Kantar Worldpanel earlier this week, showing that Sainsbury's and Asda took market share from Tesco.

Sainsbury's reported a 10% rise in sales of its top-end Taste the Difference range, but also saw its Basics range increased by "high single digits".

"Customers are saving money on some items so they can get specialness and a treat with other items," Mr King said.

The chain said there had been a notable rise in sales of unsalted butter and dried fruit as home baking rose in popularity.

Like Morrisons, Sainsbury's said that customers were typically putting one item less in their baskets than in the past, but it claimed it is recouping much of this through its convenience stores as customers shopped more frequently in an effort to avoid waste.

Mr King said he expected another year of shoppers managing their budgets strictly, focusing on more cooking from scratch and use of leftovers.

"We think volume decline might happen this year as well," Mr King said.

The chain has been undergoing an expansion drive, adding more than 600,000 square feet to its estate over the period, including the opening of its 1000th store in Irvine before Christmas.

It now operates from 60 stores in Scotland and is planning to open outlets in Pitlochry and Montrose this year.

Meanwhile Tesco, which is due to report on its Christmas trading performance today, has announced that it is intending to mothball 12 stores at its loss-making Fresh & Easy business in the United States.

Tesco, who launched the business in 2007 just months before the recession, said it remained committed to the chain.