Milk is a consumable item, available in Risen only. As most liquids in the game, milk restores mana rather than health. Drinking this will add 5 mana to the character's total, never exceeding the maximum level of mana available to him.
Milk is not in high demand among owners of taverns, innkeepers, or merchants, so they do not keep any supply. It is, though, a staple of daily life away from places like Harbour Town or even the Don's Camp. If they are searched, settlements and farms across the island of Faranga will often yield bottles of milk. There are definitely better sources for restoring depleted mana, but in a pinch bottles of milk are better than nothing.