The Fifth Precept of Buddhism, translated from the Pali Canon, is "I undertake the training rule to abstain from fermented and distilled intoxicants which are the basis for heedlessness." Does this mean Buddhists aren't supposed to drink?
About the Precepts of Buddhism
It is said that an enlightened being naturally responds correctly and compassionately to every situation. In this way, the precepts describe the life of a Buddha. They are not a list of commandments or rules to be followed without question. By working with the precepts, we train ourselves to live more compassionately and harmoniously, as enlightened beings live.
An American Zen teacher, the late John Daido Loori, Roshi, said ("kai" is Japanese for "precepts"),
"The Precepts contain the totality of the teachings of the Buddhadharma. ... People inquire about practice, 'What is lay practice?' Kai -- the precepts. 'What is monastic practice?' Kai -- the precepts. 'What is home practice?' Kai -- the precepts. 'What is the sacred?' -- Kai. 'What is the secular?' -- Kai. Everything we see, touch, and do, our way of relating, is right here in these precepts. They are the Buddha Way, the heart of the Buddha." (The Heart of Being: Moral and Ethical Teachings of Zen Buddhism, page 67)
See also "The Buddhist Precepts: An Introduction."
The Fifth Precept in Theravada Buddhism
Bikkhu Bodhi explains in "Going for Refuge" that the Fifth Precept can be translated from the Pali to prohibit "fermented and distilled liquors which are intoxicants" or "fermented and distilled liquors and other intoxicants." Either way, clearly the guiding purpose of the precept is "to prevent heedlessness caused by the taking of intoxicating substances."
According to Bikkhu Bodhi, violating the precept requires an intoxicant, an intention to take an intoxicant, the activity of ingesting the intoxicant, and the actual ingestion of the intoxicant. Taking medication containing alcohol, opiates or other intoxicants for genuine medical reasons does not count, nor does eating food flavored with a small amount of liquor. Otherwise, Theravada Buddhism considers the Fifth Precept to be a clear prohibition of drinking.
Although Theravada monks generally don't march around calling for prohibition, laypeople are discouraged from drinking. In southeast Asia, where Theravada Buddhism dominates, the monastic sangha often calls for bars and liquor stores to be closed on major uposatha days.
The Fifth Precept in Mahayana Buddhism
For the most part, Mahayana Buddhists follow the precepts as explained in the Mahayana Brahmajala (Brahma Net) Sutra. (There is a Theravada sutra with the same name, but they are different texts.) In this sutra, drinking liquor is a "minor" offense, but selling it is a major breach of the precepts. To drink liquore hurts only oneself, but selling (and, I assume, distributing it for free) hurts others and is a violation of the Bodhisattva vows.
Within the several schools of Mahayana there are some sectarian differences on the matter of drinking, but the Fifth Precept often is not treated as an absolute prohibition. Further, the meaning of "intoxicant" is broadened to include anything that distracts us from the path, not just alchohol and drugs.
Zen teacher Reb Anderson says, "In the broadest sense, anything we ingest, inhale, or inject into our system without reverence for all life becomes an intoxicant." (Being Upright: Zen Meditation and the Bodhisattva Precepts, page 137). He describes the act of intoxication as bringing something into yourself to manipulate your experience. This "something" can be "coffee, tea, chewing gum, sweets, sex, sleep, power, fame, and even food." One of my intoxicants is television (I find crime dramas soothing; I have no idea why).
This doesn't mean we are prohibited from using coffee, tea, chewing gum, etc. It means to take care not to use them as intoxicants, as ways of soothing and distracting ourselves from the direct and intimate experience of life. In other words, whatever we use to distract ourselves into heedlessness is an intoxicant.
In the course of our lives most of us develop mental and physical habits that enable nice, cozy states of heedlessness. The challenge of working with the Fifth Precept is to identify what those are and deal with them. From this perspective, the question of whether to abstain from alcohol entirely or drink in moderation is an individual one that requires some spiritual maturity and self-honesty.