Sounds to me like there are two possibilities here:
1) He is making Rocoto extract and maybe adding a few other things to turn it into a sauce. This is done by soaking chillies in alcohol until thoroughly infused, then evaporating the alcohol content off at a low heat (<50°c) until you've basically just got concentrated chilli juice.
2) He is undergoing some strange process of infusing the vinegar before it becomes vinegar, fermenting the alcohol and chilli together.
High alcohol levels will stop fermenting .
So no fermenting after this stuff is added.