There is an obligation of simcha[1] on the holidays, including all of Chol HaMo’ed.[2] The classical way to reach that simcha was to partake in the special festival korbanot called shalmei simcha.[3] The question is what happens nowadays when there are no korbanot.
The Rambam[4] says that in addition to korbanot, or perhaps in their place, simcha is fulfilled nowadays through various physical enjoyments, depending on the person. These include food treats for children, clothing for women, and meat and wine for men. The Beit Yosef[5] is troubled with the Rambam’s mention of meat, as the gemara[6] states specifically that wine takes the place of the shalmei simcha. The Nishmat Adam[7] explains that the Rambam means that one has a choice between wine and meat. In any case, the Rambam seems to understand that the consumption of wine is a way to fulfill a Torah-level obligation of simcha.[8] Tosafot[9] differs and maintains that nowadays, in the absence of korbanot, simcha on the holidays is only a Rabbinic decree.
Either way, there seems to be some obligation to drink wine throughout the chag, and as you note, not all observant men are careful to do so. Yet, this phenomenon is hardly new, as a gemara seems to assume that not everyone drinks or even has access to wine during the chag. The gemara[10] discusses the possibility of reciting Shehecheyanu throughout the chag and points out that according to the opinion that wine is necessary in order to recite Shehecheyanu, it may not be possible to do so, as wine in not always readily available. As Rashi[11] explains, “wine is not ‘found’ for all people on Chol HaMo’ed.” The Mishneh Halachot[12] claims that the gemara was not questioning the obligation to drink wine on Chol HaMo’ed but was just pointing out that it was nevertheless not always available. According to the aforementioned Nishmat Adam, who states that one has a choice between wine and meat, there is no question, for if one has meat, there is no need for wine.
The Shulchan Aruch does not cite an independent obligation to partake of wine on Chol HaMo’ed, but he says regarding Yom Tov that the meal is based around wine.[13] On Chol HaMo’ed, however, there is no outright obligation to have a full meal.[14] Nevertheless, as the Magen Avraham[15] asserts, there is a preference to have a full meal, which raises the question of whether having wine is part of that preference.
A logical compromise, presented by the Sha’agat Aryeh[16] and Mo’adim U’Zemanim,[17] goes as follows. While the mitzva from the Torah to have simcha on Yom Tov in the Beit HaMikdash required bringing the shalmei simcha as a set rule, there are more options in our time. The gemara[18] brings a proof that wine is an effective means of making one happy. The Rambam finds a basis for meat being an important component of simcha, as well. These are subjective components, and there are other alternatives, which for some people are much more appropriate. The gemara[19] already says that, in general, it is fitting to give clothes to women and sweets to children. However, even for adult males, other foods or experiences may be effective replacements for wine. If one does not enjoy wine, then alternatives are certainly called for.
It is a good practice for one who enjoys wine to drink a revi’it (3-4 oz.) daily together with a Chol HaMo’ed meal to fulfill the mitzva according to all opinions and/or in the optimal way.[20] Grape juice is not a replacement, as a mild level of intoxication is part of the simcha element.[21] Some say that any alcoholic beverage is sufficient to provide simcha.[22] However, one who does not drink wine but does other things to make each day festive need not feel guilty. Obviously, anyone who drinks an alcoholic beverage must be certain to be in conformity with the law and the strictest standards of safety before driving a car.