Tap water is usually not drinkable in Thailand outside of Bangkok. In many places in Bangkok however, particularly in new buildings, drinking tap water is perfectly safe. However, if you don't want to chance it, buying a bottle of water is the obvious solution. Bottled water (น้ำเปล่า naam plao) is cheap and ubiquitous at 5-20 baht a bottle depending on its size and brand, and drinking water served in restaurants is always at least boiled (น้ำต้ม naam tom). Ice (น้ำแข็ง naam khaeng) in Thailand usually comes packaged straight from the factory and is safe; there is only reason to worry if you are served hand-cut ice. You can buy a large package of ice in most 7-Elevens for 7 baht, too.
Mainly in residential areas, machines selling water into your own bottle (1 baht/L, or 50 satang (0.5 baht/L) if paid more than 5 baht) are often available, located in some (Thai mostly) hotels, local shops, or just on the street near one. This is a clean (the water is cleaned and UV-treated on the spot) and extremely cheap option, also, this way you'll avoid making unnecessary plastic waste from empty bottles.
Coconut water (น้ำมะพร้าว naam ma-phrao), iced and drunk directly from a fresh coconut is a cheap and healthy way to cool the body. Available at restaurants and also from fruit juice vendors.
Fruit juices, freezes and milkshakes of all kinds are very popular with Thais and visitors alike. Most cafés and restaurants charge 20-40 baht, but a bottle of freshly squeezed Thai sweet orange juice (น้ำส้ม naam som) - which really is orange in colour! - can be sold on the street for 15-30 baht. Thais often add salt to their fruit juices-- an acquired taste that you might just learn to like. Thais also like to have basil seeds in their iced fruit juice sold on the road. They look like small jelly balls down in the bottle.
One of Thailand's most characteristic drinks is Thai iced tea (ชาเย็น chaa yen, lit. "cold tea"). Instantly identifiable thanks to its lurid orange colour, this is the side effect of adding ground tamarind seed (or, these days, artificial colour) during the curing process. The iced tea is always very strong and very sweet, and usually served with a dash of condensed milk; ask for chaa dam yen to skip the milk.
Naam chaa and chaa jiin are weak and full-strength Chinese tea, often served in restaurants for free. Western-style black tea is chaa ron (ชาร้อน). Coffee (กาแฟ kaafae) is also widely available, and is usually served with condensed milk and lots of sugar. Ask for kaafae thung to get traditional filtered "bag" coffee instead of instant.
Starbucks is present in Thailand, but for the moment local competitors Black Canyon Coffee and S&P still have the edge in market share. These are the places to look for if you want that triple-mocha latte with hazelnut swirl and are willing to pay 75 baht for the privilege.
Thailand is the original home of the Red Bull brand energy drink - a licensed and re-branded version of Thailand's original Krathing Daeng (กระทิงแดง, "Red Bull"), complete with the familiar logo of two bulls charging at each other.
The Thai version, however, is syrupy sweet, uncarbonated and comes packaged in medicinal-looking brown glass bottles, as the target customers are not trendy clubbers, but Thailand's working class of construction workers and bus drivers in need of a pick-me-up. And a pick-me-up it most certainly is; the caffeine content is higher even than Western-style Red Bull, and packs a punch equivalent to two or three shots of espresso coffee. Krathing Daeng and its many competitors (including M150, Shark, .357 and the inevitable Karabao Daeng, "Red Buffalo") are available in any convenience store for 10 baht a pop, although in some places you can now buy imported Red Bull for five times the price.
Drinking alcohol in Thailand, especially if you like Western tipples, is actually comparatively expensive, but still very affordable by Western standards.
Retail sales of alcohol in supermarkets and multi-national convenience stores, are limited to between 11:00-14:00 and 17:00-24:00. Restaurants and bars are not affected, and smaller, non-chain stores rarely observe this rule. 7-Eleven is a stickler for following this rule. However, in certain circumstances these rules are relaxed for alcohol purchases above a particular quantity. For example, if you try to purchase 5 litres of wine during the restricted period, it will not be allowed. However, if you were to purchase, say 10 litres of wine, in the same period then this might be permitted. Convenience stores at gas stations are not permitted to sell alcohol at any time.
There are also occasional days throughout the year when alcohol can't be sold anywhere, even the small mom & pop shops normally adhere to the rules on these days, and most bars and pubs do too (although you can probably find a beer somewhere if you're desperate enough). Upmarket hotel bars and restaurants are probably the only places that are realistically likely to be exempt. Religious holidays and elections are normally the reason for these restrictions.
Western-style beer (เบียร์ bia) is a bit of an upmarket drink in Thailand, with the price of a small bottle hovering between 40 and 100 baht in most pubs, bars and restaurants. Thais like their lagers with relatively high alcohol content (around 6%), as it is designed to be drunk with ice, so the beer in Thailand may pack more of a punch than you are used to. However, if you are an experienced drinker from Western Europe, namely Belgium or Germany, you will find it familiar.
Imported liquors, wines and beers are widely available but prohibitively priced for the average Thai. A shot of any brand-name liquor is at least 100 baht, a pint of Guinness will set you back at least 200 baht and, thanks to an inexplicable 340% tax, even the cheapest bottle of wine will set you back over 500 baht. In cheaper bars (especially the go-go kind), the content of that familiar bottle of Jack Daniels may be something entirely different.
Thai rice wine (สาโท sato) is actually a beer brewed from glutinous rice, and thus a spiritual cousin of Japanese sake. While traditionally associated with Isaan, it's now sold nationwide under the brand Siam Sato, available in any 7-Eleven at 25 baht for a 0.65L bottle. At 8% alcohol, it's cheap and potent, but you may regret it the next morning! The original style of brewing and serving sato is in earthenware jars called hai, hence the drink's other name lao hai (เหล้าไห). These are served by breaking the seal on the jar, adding water, and drinking immediately with either glasses or, traditionally, with a straw directly from the pot.
The misnamed Thai whisky (lao) refers to a number of liquors. The best known are the infamous Mae Khong (แม่โขง "Mekong") brand and its competitor, the sweeter Saeng Som ("Sangsom"), which are both brewed primarily from sugarcane and thus it is actually rum. Indeed, the only resemblances to whisky are the brown color and high alcohol content, and indeed many people liken the smell to nail polish remover, but the taste is not quite as bad, especially when diluted with cola or tonic water. This is also by far the cheapest way to get blotto, as a pocket flask of the stuff (available in any convenience store or supermarket) costs only around 50 baht.
The "real" Thai whisky is lao khao (เหล้าขาว "white liquor"), which is distilled from rice. While commercial versions are available, it's mostly distilled at home as moonshine, in which case it also goes by the name lao theuan ("jungle liquor"). White liquor with herbs added for flavor and medical effect is called ya dong (ยาดอง). Strictly speaking, both are is illegal, but nobody seems to mind very much, especially when hill tribe trekking in the North you're likely to be invited to sample some, and it's polite to at least take a sip.