Vinegar is produced through the fermentation of ethanol by acetic acid bacteria, yielding acetic acid. There are three main methods of production: (1) the Orleans method using wooden barrels, (2) submerged fermentation in large steel tanks with air bubbling, and (3) the generator method dripping alcohol through wood shavings with air blown through. The production process involves refining raw vinegar to remove bacteria, filtration, pasteurization, bottling, and concentration to increase the acetic acid content.