The mitzvah of kiddush on Shabbos day is of a rabbinical decree. Some people have the custom to make the day kiddush on liquor. What is the source of this custom? The Shulchan Aruch 289:2 says that in a situation that wine cannot be found, beer or liquor may be used. The Mishna Berura 272:29 says that nowadays that wine is no longer a household drink, beer or liquor could be used for the daytime kiddush even if wine is available. The Mishna Berura does add that wine is still the preferable choice.
When using liquor, the Mishna Berura 272:30 requires that a cup (not a shotglass) be filled to the top, and a full cheekfull must be drunk. There is a Chasidic custom to make kiddush on a shotglass of liquor. But unless one has a clear family minhag, a full cup must be used.
According to Rav Moshe Feinstein 2:75 any drink that is considered an important drink and will be consumed for purposes other than thirst may be used. For this reason water or soda may not be used. The Aruch Hashulchan allows for the use of milk.

Rabbi Tzvi Aryeh Hyman, Mir Yeshiva
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