I am staying with her at the moment, just for a week. Normally she lives alone, although we are considering getting extra help in to support her. She is constantly asking for her sherry and refusing to eat until I give it to her.... is it skillful to refuse or is there a better way to handle it?
But think long and hard about whether/how intruding YOUR decisions for her own would really improve her life.
I appreciate that your mother has dementia - high functioning = mild, do you mean? - but all the same. Without wanting to put it too unkindly, where do you get off going into her house and hiding her sherry? It's… a bit cheeky.
That is not to say that my eyebrows didn't hit the ceiling when you mentioned a bottle of sherry a day. Some going. Does she drink anything else at all??!!
So I agree that a good plan, step by step, would include getting her alcohol intake down at least to within a country mile of normal recommendations (of around two units, which would be two smallish glasses, a day). But there are ways and ways. If it has been her habit to drink sherry before a meal, you have no business stopping her - or not unless she has acute disease or is taking medication that doesn't mix with alcohol, anyway. You must take the long route of persuading her to moderate her consumption in the interests of better health and better sleep.
My ex's late grandmother survived for donkeys' years on a combination of lobster, pethidine, Cognac and Sobranie Cocktail cigarettes. It worked for her. First they took away her Sobranies (fair enough, bit of a fire hazard by then). Then they weaned her off the pethidine. Then they took away the Cognac. Not long after, she died. What was the point? All she got out of her new improved regime (apart from not being burned to a crisp, which I had to agree with) was dying slightly later and miserable.
This isn't your fault - you're being responsible, and I respect that. But there is this kind of unwritten rule hanging around in our culture that once you are old enough to be dependent on others' help, you are necessarily obliged to start treating your body as a temple and must eschew all vices. Well nuts to it. Let your mother have her sherry if she likes it. The clue is in the word "elderly" mother: QED, it can't have done her that much harm, can it?
How is your Mom getting these bottles of sherry? Is she leaving the building and having someone take her to the store that sell same? Or is she ordering it via phone and it is being delivered to her? Does she order daily or order it by the case?
If you were able to control this on a regular basis you could water it down or add Cherry 7-Up.
How old is your mom? Part of me says if she likes sherry, let her have it, since she's got dementia and her life won't be getting any better no matter what you do. If she likes her sherry, give it to her. But I'd water it down by up to 50% if I could.