My dad and I saw this wine rack on a different website, but it didn't have any instructions. We liked it, so we decided to make it for my mom for Christmas and show everyone how we did it.
What you need...
1) A couple pallets (Only one is necessary, but a couple won't hurt so you have extra)
2) Sanders or sand paper
3) Saws (We used a Sawzall, Mider saw, and table saw)
4) Standard drill with some type of a hole bit
5) Jig Saw
6) Hammer
7) Stain

Step 1: Cut the Back/base of the Rack Out

Depending on the size of boards on your pallet, cut the pallet to your desired height. Some of the pallets we did 2 boards and others we did 3. If you want a top, you will have to go pretty high so you can still get the bottles in. Make sure to cut the pallet so you have the a thicker 2x4 on the bottom as you will see in the pictures. We used a Sawzall and chop saw. You will then want to cut the boards flush to the base. Make sure to sand everything down when you are done cutting! We used a hand sander.

Step 2: Cut the Front and Bottom of the Rack

Cut out boards for the bottom and front of the rack. You will need to pull the nails out. For the bottom, we had to strip it down a bit with a table saw so it would be flush. We reused the nails we pulled from the pallet to attached the front and base to give it that rustic look. Make sure to drill pilot holes so you don't split the wood!
** If you want to put bigger bottles in, you may need to put extra spacers on the front. We tested with a bottle to make sure before hand.
** On one of the racks we did, we did two boards instead of one on the front so you can see the labels of the bottle.

Step 3: Cut the Wine Glass Holder

Cut two small pieces for a spacer between the wine rack and the glass holder. We an inch and a half I believe. Then cut a bottom board the same size you did in the previous step. Sand them down but DO NOT attach yet. We have to work with them more in the next step.

Step 4: Cut the Holes for the Glasses

This part is the only tricky part. First, we put the glasses on the board to get an idea for spacing, taking into consideration the space we had to work with. We then took a piece of wood and cut it down as a spacer and drew our cut lines. **Note: if you are making multiple racks, don't attach this piece and use it as a template for future racks

There could be some trial and error with this step, so have an additional board or two.

We then drilled the holes and cut out the slot for the glasses using a paddle bit and a jig saw. After that we hand sanded the slots.
Now you will want to use screws to attach the spacers (These won't be seen so you don't have to reuse the pallet nails)

If this is your only one, nail the bottom piece on!

Step 5: Optional Top

We did one with a top with the hopes to put some lights inside. You really need to make sure to have it high enough so you can still put the bottles in. We just ripped down two boards to fit and used glue to attach the smaller front piece.

Step 6: Stain and Show Off

Here are the 4 we did. As you can see they are all slightly different variations. The one in the back right we used two smaller boards for the front so you can see the labels when the bottles are in the rack (Too bad you can't see it in this picture.) We also used different stain on them to fit the color scheme in the house that they were going. For staining, we just used a rag and elbow grease.