Why do we use wine (or grape juice - fruit of the vine) when sanctifying Shabbat? How was it first determined that wine was holy and that it is used to satisfy and make holy the coming holiday or shabbos. Is there a Torah source for using wine?
According to Rambam the requirement of saying kiddush and havdalah over wine is a Rabbinic addition to the Torah commandment to sanctify the Sabbath by saying kiddush at it's beginning and havdalah at it's end.
מדברי סופרים לקדש על היין, ולהבדיל על היין.
It is a Rabbinic requirement to make Kidush on wine and to make Havdalah on wine.
According to him the wine that is used must be fit for use on the altar which means he does not allow cooked wine for example.
אין מקדשין אלא על היין הראוי לנסך על גבי המזבח;
One does not make Kiddush except on wine that is suitable as a wine libation on the alter;
I'm not sure when this enactment was made, but if it was made after the destruction of the Temple, I would guess that it's in remembrance of the wine libation. That would be the source in the Torah for wine being special. But that's just a guess. That's if you accept this opinion that the wine used must be fit for use on the altar ( and I think not everyone does ).
I heard a wonderful shiur from R Akiva Tatz on the question of why we use wine at every special occasion (kiddush, but also at a brit mila or a wedding).
He explains we use wine every time there is a transition or an expansion from the limited/narrow/physical world to the unlimited/spiritual/transcendent world; every time we lift the mundane into the spiritual. This is true when the week becomes Shabbat (see also the end of Derech Hashem by the Ramchal where he explains how Shabbat is at a higher level than the week), when two people become married (and become a new, more spiritual entity, that can now give birth to others), when a boy enters the alliance and fully becomes a Jew.
We use wine in all these occasions because wine (and alcohol) is the only physical/material substance that gets better over time. Regular material things degrade over time (i.e., entropy: food left alone will spoil, the body gets weaker with the years) while spiritual things improve over time (e.g., we reach higher levels as we learn, older people are wiser). Wine, being the only physical thing that improves over time, symbolizes the potential of the physical to access the spiritual, the ability to transcend the mundane and sanctify it.
The gematria of wine (yayin) is 70, the same as the one of secret (sod). As the gemara in Sanhedrin 38a says, when wine enters secrets come out: the hidden world comes to the surface. Wine, used correctly, expands our spiritual potential.
In summary, wine is only thing in the world that follows the rules of a spiritual substance even though it is physical. As such we use wine to show our potential to bring out the spiritual side of the physical reality.