The breakdown or oxidation of ethanol occurs in the stomach and liver. An enzyme called alcohol dehydrogenase strips electrons from ethanol to form acetaldehyde. Then another enzyme, called aldehyde dehydrogenase, converts the acetaldehyde, in the presence of oxygen, to acetic acid, the main component in vinegar. The acetic acid is further broken down into carbon dioxide and water. Along the way, all these compounds can be used by the body for different things, as needed, or excreted in the urine, as the case may be.