Preheat oven to 350 degrees. Grease two 8-inch cake pans. In a medium bowl, whisk together flour, baking powder, and salt. Set aside.
In a large bowl, cream together butter and sugar until light and fluffy. Mix in orange zest, then add eggs one at a time. Mix in orange juice and vanilla.
Mix in dry ingredients and sangria, alternating between the two, until fully incorporated. Stir in food coloring until well mixed. Divide between cake pans and bake 30-35 minutes.
Meanwhile, make frosting: In a large bowl combine butter and powdered sugar. Add orange juice and sangria and mix until smooth. Refrigerate until ready to use.
Once cake is done, let cool at least two hours. When cake has cooled, frost to your liking.