Sie trinken Milch = you (formal) drink milk
Du trinkst Milch = you (informal) drink milk

sie = they or she
Sie = you (formal) plural and singular

sie trinkt = she drinks
sie trinken = they drink
Sie trinken = you (formal) drink

At the start of a sentence, when a capital "S" is present (regardless of if they mean she, they, or you) you must look at how the verb is conjugated.

Sie trinkt = she drinks
Sie trinken = you (formal) drink OR they drink. As a stand alone sentence it could be either, so you would need context to figure our if it was "you" or "they".

I hope that helps!