Yes. Israel (and the whole of what we call the Holy Land) was a primarily agricultural area. Grapes for wine was a rather important commodity, and there were many vineyards. Olives and cereal grains (wheat, barley) were the other main staples that were agriculturally produced. In fact, during the 7th century BC, wine from this region was exported across the Mediterranean, perhaps to Egypt and beyond.

We have recovered remains of ships containing hundreds of wine jars, the most famous of these wrecks were the Tanit and Elissa (PDF Warning). These jars were excavated by a team headed by Robert Ballard (of Titanic fame) and archaeologist Larry Stager of Harvard University. They actually made a National Geographic special about it, called Lost Ships of the Mediterranean, which is really well done.

We have also recovered large amounts of grape pits from archaeological sites as well.

So yes, it was grape wine that is mentioned in the Bible. Other alcoholic drinks made and consumed in that area of the world included beer and a stronger brandy-like liquor we call grappa. In addition, the wine was probably very similar to modern retsina, because the jars were often lined with resin as a preservative.

If you are interested in reading more, I recommend Stager's book Life in Biblical Israel as a fantastic overview of all the stuff relating to Old Testament life.