It is somewhat common in China and parts of Southeast Asia, very similar to how people put a caterpillar in tequila in this part of the world. Personally, I find it gross.
The snake is inserted live into the bottle, alcohol is then poured in and the bottle is sealed. I found an article a while back where the snake managed to live through this ordeal and promptly bit the purchaser as soon as the bottle was opened. Talk about tenacious.