Gemara

20b (Beraisa): One may set up a baker's or dyer's store under another's wine, because the smoke improves the wine,

(Rav Yosef): Even smoke of a candle harms wine of Bavel.

97a (Rav): One must make Kidush on wine Kosher for Nesachim.

He does not exclude unfermented wine (grape juice), for b'Di'eved it is Kosher for Nesachim, so it is Kosher l'Chatchilah for Kidush!

Rather, he excludes wine that was diluted, exposed, smells bad...

(Beraisa): One should not bring any of these for Nesachim. If he did, it is invalid.

Question: Surely, he did not need to exclude exposed wine. It is dangerous, and one may not drink it!

Answer: He disqualifies it even if it was passed through a strainer according to R. Nechemyah. Then one may drink it, but it is invalid for Nesachim - "Hakrivehu Na l'Fechasecha (would your governor accept such a gift?!)"

Menachos 86b (Mishnah): We do not bring for Nesachim wine that is sweet, smoked or cooked. If it was brought, it is Pasul.

Bechoros 17a (Rav Ashi): If one draped a vine over a fig tree, wine from its grapes is Pasul for Nesachim (libations on the MIzbe'ach). It says "Zevach u'Nesachim" - just like the Zevach must be unchanged, also the Nesachim. Draping a vine over a fig tree changes the smell of the wine.

Rishonim

The Rif (Pesachim 22b) brings the Gemara in Bava Basra.

Ran (DH Ein): We disqualify from Kidush wine Pasul for Nesachim due to its inferiority. This rule does not exclude cooked wine, for cooking improves wine, just like smoking it improves it (20b)!

Rambam (Hilchos Shabbos 29:14): One may say Kidush only on wine Kosher for Nesachim. Therefore, if any honey was mixed in, even a drop in a big barrel, one may not say Kidush. We rule like this in the entire west. Some permit saying Kidush on it. 'Wine Kosher for Nesachim' excludes only wine that smells bad, was exposed or was cooked. One may not say Kidush on them.

Ra'avad: The latter opinion is correct. The Yerushalmi permits to make Kidush on Konditon wine (which has honey and peppers).

Magid Mishneh: The Gemara did not discuss cooked wine. All the Ge'onim disqualify it, like the Rambam. The Gemara is not a peddler (it need not teach every law). Some say that we bless sheha'Kol on it. The Rambam did not say so in Hilchos Berachos. The Acharonim say that one may say Kidush on it, for it improved; the Ramban and Rashba say so.

Rosh (Bava Basra 6:10): One must make Kidush on wine Kosher for Nesachim. This excludes wine that smells bad or was exposed, even if it was passed through a strainer. It is invalid due to Hakrivehu Na. R. Tam says that we bless Borei Peri ha'Gefen on cooked wine, and one may say Kidush on it. Even though cooked vegetables lose their Berachah because they changed, this refers to garlic and leeks, which changed for the worse. They had pungency, and lost it. Other vegetables change for the better (through cooking), so their Berachah does not change. Also cooked wine improved! One may not derive from here that it is Kosher for Kidush because the Gemara did not exclude it. Perhaps it is obvious that it is Pasul, for we do not bless Borei Peri ha'Gefen on it, for it changed for the worse! In Terumos 11:1, R. Yehudah permits cooking Terumah wine because this improves it. All agree that cooking improves it; Chachamim forbid only because this diminishes it! The Yerushalmi asks why one may be Yotzei the four cups of Pesach with cooked wine, but one may not take cooked wine to be Terumah on uncooked wine, for it is from bad on good! We answer that a Yisrael may not take cooked wine to be Terumah, for then the Kohen receives a smaller quantity. Also, some people cannot drink cooked wine because it is too potent. Chachamim and R. Yehudah argue about whether a Kohen may cook his own wine. In a Teshuvah, Rashi says that we do not bless Borei Peri ha'Gefen on cooked wine. Rav Tzemach Gaon says that this is why we did not need to exclude it. I refuted this proof. In Menachos we disqualify cooked wine b'Di'eved for Menachos, but here we conclude that 'Kidush wine must be Kosher for Nesachim' disqualifies only wine with a bad smell, that was exposed or was changed for the worse. Cooked wine is Pasul for Menachos because it changed from its initial state, just like wine from a vine that grew over a fig tree (Bechoros 17a).

Gra (OC 272:13): Rav Tzemach Gaon learns from Menachos that cooked wine is Pasul for Nesachim and Kidush. The Rosh refuted this, for Bava Basra says that if it improved, it is Kosher! Rather, it is Kosher, for it is Kosher for the four cups. However, the Shulchan Aruch (YD 331:63) allows taking uncooked wine to be Terumah to exempt cooked wine, but not vice- versa. This shows that cooked wine is inferior! Why does the Rambam (Dameshek Eliezer - this should say 'Tur') say that we bless sheha'Kol on cooked wine, but allows it for the four cups? The Yerushalmi explains that all agree that cooking improves it, just it decreases (the volume or number of people who drink) the wine. Surely, wine from a vine that grew over a fig tree is Kosher for Kidush!

Poskim

Shulchan Aruch (OC 272:1): One may not say Kidush on wine that was exposed, even nowadays that we are not particular about exposure.

Magen Avraham (1): If it was exposed only a brief time, we are not concerned, especially in our lands where wine in not so plentiful. Also, officers are not particular about this, unless it lost its smell and taste.

Mishnah Berurah (3): The Chayei Adam says that this is only where wine is expensive and people are not so concerned if it was exposed a short time. One who says Kidush on beer should be careful about this. It seems that if he has no other (wine or beer), he need not be particular b'Di'eved even about beer, just like for wine.

Gra (2): Nowadays is like after it was strained in the days of the Gemara.

Kaf ha'Chayim (7): If it was exposed overnight, it is Pasul even if it did not lose its smell and taste. Tosefes Shabbos is stringent even if it was exposed a short time. L'Chatchilah one should not leave it exposed even a short time; b'Di'eved, it is Pasul only if it lost its smell and taste or was left overnight.

Kaf ha'Chayim (8): Beis Yehudah says that we do not distinguish Havdalah from Kidush regarding this. This is not only like the Rambam, who holds that Havdalah is mid'Oraisa. Even those who say that it is mid'Rabanan hold that Chachamim enacted like mid'Oraisa.

Kaf ha'Chayim (9): If an open bottle is in a closed box, it is not disqualified unless it lost its smell and taste.

Kaf ha'Chayim (10): Birkei Yosef says that if one said Kidush on exposed wine, he was not Yotzei. It is difficult to say that he says Kidush again, for Kidush on wine is only mid'Rabanan, especially nowadays that we are not concerned for exposure and most people drink such wine! Rather, he need not say Kidush again.

Kaf ha'Chayim (11): One must be careful about this at a Sheva Berachos, for the Satan prosecutes more at a time of Simchah. Also, people are distracted, and it is common to leave the bottles esposed. Also, the wine can become forbidden or repulsive through mosquitoes and flies.

Shulchan Aruch (3): One may say Kidush on sweet wine. In any case, it is a Mitzvah to pick good wine for Kidush.

Kaf ha'Chayim (22): This refers to naturally sweet wine. If sugar or something else was added to sweeten it, the latter opinion in Sa'if 8 (which disqualifies wine with honey) disqualifies it.

Teshuvos v'Hanhagos (4:88): Preservatives (sorbet, Gafris (lime) and lemon salt) detract from the taste, so they disqualify. Only the Rambam disqualifies if sugar was added. The custom is to be lenient about all this; one who seeks pure wine for Kidush will be blessed.

Shulchan Aruch (8): One may say Kidush on cooked wine and wine with honey. Some disagree.

Mishnah Berurah (19): The latter opinion holds that it changed for the worse, and we bless only sheha'Kol on it.

Mishnah Berurah (21): According to the Rambam, one should not put sugar into the wine.

Kaf ha'Chayim (43): If cooked wine and uncooked wine were mixed, we follow the majority regarding Berachah and Kashrus for Kidush.

Note: This is according to the latter opinion. The Kaf ha'Chayim (38) says that we bless Borei Peri ha'Gefen on cooked wine.

Rema: The custom is to say Kidush on it, even if he has other wine, but it is not as good as the cooked wine or wine with honey.

Source: Agur, cited in Beis Yosef (DH v'Al).

Mishnah Berurah (23): When they are equal, we are concerned for the latter opinion. However, we bless Borei Peri ha'Gefen on it.

Kaf ha'Chayim (45): If the uncooked wine is good, but not as good as the cooked wine, one says Kidush on it.