In my head-canon DF, dwarves invent brewing beer, elves invent vinting wine, & humans invent distilling spirits, and the knowledge of the three forms of booze are exchanged through trade. Distillation, the most difficult and scientifically advanced process, is discovered by the humans because of their acceptance of fire & mechanics from the dwarves, and agrarian techniques from the elves.
I've always thought of dwarves as masters of all alcohol. A mushroom? Huh, let's turn it into booze. Radishes? Booze. Bee vomit? Booze. That cave plant we make fabric out of? Booze.
The pursuit of alcohol mixed with the pursuit of metallurgy should make dwarves prime alchemists. One of the other potential uses for Alchemy I've mentioned in the past would be "weapons grade" or "fuel grade" ethanol. Medicines could also be produced, or poisons with all that snake and bee venom we get from caravans.
Alchemy is the art of liberating parts of the Cosmos from temporal existence and achieving perfection which, for metals is gold, and for man, longevity, then immortality and, finally, redemption. Material perfection was sought through the action of a preparation (Philosopher's Stone for metals; Elixir of Life for humans), while spiritual ennoblement resulted from some form of inner revelation or other enlightenment (Gnosis, for example, in Hellenistic and western practices). -HJ Sheppard - Wikipedia
I'm suddenly really interested in what else Alchemy could do, and I'm not sure I want to make another topic for it. Here's a few quotes from wikipedia:
Alchemists made contributions to the "chemical" industries of the day—ore testing and refining, metalworking, production of gunpowder, ink, dyes, paints, cosmetics, leather tanning, ceramics, glass manufacture, preparation of extracts, liquors, and so on.
...Dating from 300 to 500 CE, they contained recipes for dyeing and making artificial gemstones, cleaning and fabricating pearls, and manufacturing of imitation gold and silver
muriatic (hydrochloric acid), sulfuric and nitric acids, and Aqua Regia
Jabir's ultimate goal was Takwin, the artificial creation of life in the alchemical laboratory, up to, and including, human life. (I've often heard this as the "Homonculus". Secrets, anyone?)
Rhazes(854-925) refuted Aristotle's theory of four classical elements for the first time and set up the firm foundations of modern chemistry, using the laboratory in the modern sense, designing and describing more than twenty instruments, many parts of which are still in use today, such as a crucible, cucurbit or retort for distillation, and the head of a still with a delivery tube (ambiq, Latin alembic), and various types of furnace or stove.
By refining bases into gold, the Chinese alchemists believed that immortal life would be delivered if the "fake" or synthetic gold was ingested.
Although metal compounds are more potent when curing ailments, herbs were used because they were easier to combine and more abundantly available. To make medicines one would use ingredients like: Kolo nuts, which would be used in famous longevity pills like "Fo-Ti-Ti"; Asparagus, which was used because it was known to increase strength; sesame, which prevents senility; and pine which has over 300 different uses. (Cooper, 1990. Pg. 62) Mushrooms were and still are very popular, they are known as the "magic fungus" and have thousands of purposes within Chinese Alchemy.
Will Durant: Something has been said about the chemical excellence of cast iron in ancient India, and about the high industrial development of the Gupta times, when India was looked to, even by Imperial Rome, as the most skilled of the nations in such chemical industries as dyeing, tanning, soap-making, glass and cement... By the sixth century the Hindus were far ahead of Europe in industrial chemistry; they were masters of calcinations, distillation, sublimation, steaming, fixation, the production of light without heat, the mixing of anesthetic and soporific powders, and the preparation of metallic salts, compounds and alloys. The tempering of steel was brought in ancient India to a perfection unknown in Europe till our own times (1930s); King Porus is said to have selected, as a specially valuable gift from Alexander, not gold or silver, but thirty pounds of steel.