I don’t really like Japanese alcohol.
Could you remove the price tag from the Japanese sake bottle for me?
"What are you drinking?" "Japanese rice wine. Would you like a sip?" "Well, I suppose I’ll give it a try."
You know that 日本 is "Japan" so when you add alcohol onto the end of that you have Japanese Style Alcohol (what's the big Japanese style alcohol that everyone knows? That's sake).
The reading is just the vocab 日本's reading plus the reading you learned for 酒, put together.
The alternative reading にっぽんしゅ is really rare, but you might come across its abbreviated version ぽん酒, or ポン酒.