Yes, plasma. The fourth state of matter.
What's going on? The sparks result from an electrical discharge between the sides of the grape. If the flashes of light are not enough evidence, enjoy the 120Hz buzzing.
The discharges vaporize the sugars in the grape and then cause them to combust. If they get hot enough (due to the continued electrical arcing,) the combustion products form a plasma. Plasma is a gas where the nuclei and electrons have been ripped apart from one another. It is electrically conductive, so it absorbs microwaves keeping itself warm, and causing the cloud to glow.