The general rule in Taiwan regarding drinking water is that it should only be drunk if it has been boiled (and preferably filtered). However, the main problem with Taiwan water is that it is silty and really needs to be filtered.
Nowadays, there are many types of water filters on the market that can be hooked up to your kitchen faucet. RO filters are one option, but nowadays the choices are plentiful. The best solution is to invest in a water filter system and change the filter every year. Many new houses are actually equipped with a water filtration system. It tastes better and is most likely a bit healthier.
In Taipei the water board officially declares the water they treat to be safe to drink. However, even if you rely on official guarantees, you can not rely on the piping in every building to be up to the same standard
When out and about you can usually find a drinking fountain to refill a water bottle at most MRT stations in Taipei and Kaohsiung underground. The water here is officially guaranteed as safe to drink and should have a recent chemical analysis posted above, for those with extreme interest in water quality.
Traditional alcoholic drinks in Taiwan are very strong. Kaoliang 高粱 is the most famous alcoholic drink. A distilled grain liquor, it is extremely strong, usually 140 proof or more, and often drunk straight.
Taiwan also produces many types of Shaoxing rice wine 紹興酒, which are considered by many as being some of the best in the world.
Taiwanese people enjoy beer on ice.Beer pronounced “Pi Jiu" 啤酒. Taiwan Beer is a local brew produced by a former government monopoly—the locals call it "Tai Pi" 台啤". It is brewed with fragrant penglai rice in addition to barley giving it a distinctive flavor. Taiwan beer is a basic lager but it can now be bought with mango, grape, lychee, and pineapple flavoring. Many pubs may have Taiwan Beer on tap. Some can't stand it, but some love it. It's usually the cheapest option to buy.
Other available alcohol in Taiwan:
Taiwan is a great place for fruit drinks. Small fruit-juice bars are in abundance all over the island. These make the fresh on the spot and are experts at creating fruit-juice cocktails (non-alcoholic). zong-he - mixed - is usually a sweet and sour combination and mu-gwa niou-nai is iced papaya milk. If you don't want ice (though it is safe in Taiwan, even at road side vendors) say, chu bing and no sugar - wu tang.
The Taiwan drink market is big and competitive. Not only can you buy teas, coffees, and fruit juices all over town, but convenience stores sell a plethora of different types of drinks ranging from tea to coffee, to fruit juice, to soda, to yogurt drinks.
Tea is everywhere in Taiwan and tea stands are abundant in just about every populated area. There are too many kinds of tea drinks to mention here, but many are made with Green tea, Black tea, Oolong tea and various types of oolong. These tea drinks are refreshing on a hot summer day and you can buy just about any size for between 10-50 NT. The market for this business is big and competitive. Most are now franchised and some are prevelant everywhere while other franchises have fewer shops. If you are a tea drinker, you will most likely find the tea shop that you like the best and stick with it. When you're tired of that stand, just move onto another one.
Taiwan's speciality teas are High Mountain Oolong (高山烏龍Gau-shan wulong) - a fragrant, light tea, and Tie Guan-yin (鐵觀音) - a dark, rich brew. Enjoying this tea drank in the traditional way using a very small teapot and tiny cups is a experience you should not miss. This way of taking tea is called lao ren cha - 'old people's tea', and the name is derived from the fact that only the elderly traditionaly had the luxury of time to relax and enjoy tea in this way.
Pearl milk tea (珍珠奶茶 Zhen-Zhu Nai-Cha) is a drink, most foreigners like. Its no longer a fad in Taiwan, but can still be found at nearly every coffee/tea shop. Most all franchised tea shops sell Pearl Milk Tea which is basically milk tea with large starchy tapioca pearls inside. You suck the big pearls up the straw. It's quite fun!!
Look for a shop where it is fresh made. Just don't expect to see everyone in the homeland of pearl milk tea drinking it.
Since the 2000's, coffee has crept its way into the younger generation of Taiwanese and now shares the drink market with the old tea drinking culture. Taiwanese still love their tea drinks, but coffee and the cafe culture, driven by Starbucks, remains quite strong. As with many countries, Starbucks does a good business in Taiwan as people will meet for meetings, a chat with friends, do homework, or just escape the oppressive summer heat. One of the reasons is that Starbucks actually creates a nice comfortable environment. Tea stands are more a "to go" kind of business.
There are other coffee cafes around many cities. Taipei City has a large number of privately owned coffee shops that serve up a nice, unique ambiance, tasty food and snacks, and a high quality of coffee and service. These coffee houses are worth exploring as some of the design and architecture in them is quite creative. So, if you're into hanging out at the cafe, Taiwan won't disappoint.
Soy bean milk or usually referred to as "doujiang", is a great treat. Try it hot or cold. Savory soy milk is a traditional Taiwanese breakfast dish. It is somewhat of an acquired taste as vinegar is added to curdle the milk. Both sweet and savory soy milk are often ordered with you-tiao, or deep fried dough crullers.
There are a lot of pseudo health drinks in Taiwanese supermarkets and convenience stores. Look out for asparagus juice and lavender milk tea for example.
Every convenience store you go to Taiwan wide, be it 7-11, Family Mart, OK or a local mom & pop shop, has a nasty drink , asparagus juice. It's a very sweet drink tasting like asparagus-flavored sugar water. If you have a craving for asparagus-flavored juice, which I doubt you would you might enjoy it.