Ég drekk te í staðinn.

A natural word-by-word breakdown is:

• Ég = I
• drekk = drink / am drinking
• te = tea
• í staðinn = instead

So even if you already know the overall meaning, this helps you see how Icelandic builds it.

A useful thing to notice is that Icelandic often uses the simple present tense where English might use either I drink or I am drinking, depending on context.

Because drekk is the 1st person singular present tense form of the verb drekka (to drink).

So:

• að drekka = to drink
• ég drekk = I drink / I am drinking
• þú drekkur = you drink
• hann/hún/það drekkur = he/she/it drinks

A short present-tense pattern is:

• ég drekk
• þú drekkur
• hann/hún/það drekkur
• við drekkum
• þið drekkið
• þeir/þær/þau drekka

So drekk is the correct form because the subject is ég.

The dictionary form is að drekka, meaning to drink.

In Icelandic, verbs are usually listed with að plus the infinitive:

• að drekka = to drink
• sentence form: ég drekk = I drink

This is very common in Icelandic: the form you see in a sentence is often quite different from the infinitive, especially with strong verbs like drekka.

Usually, Icelandic does include the subject pronoun in ordinary statements.

So you normally say:

• Ég drekk te.

not just:

• Drekk te. (This would sound incomplete in most normal contexts.)

Even though the verb form gives some information about the subject, Icelandic is not like Spanish or Italian, where subject pronouns are often omitted. In neutral everyday Icelandic, saying ég is normal and expected.

Because te here is being used in an indefinite, general way: I drink tea.

If you say teið, that means the tea.

Compare:

• Ég drekk te. = I drink tea.
• Ég drekk teið. = I drink the tea.

English often uses a bare noun too: I drink tea. Icelandic works similarly here.

The verb að drekka normally takes a direct object, and that object is typically in the accusative.

So in Ég drekk te, te is functioning as the object of the verb.

For many nouns, the accusative form looks different from the nominative. But with te, you do not see a visible change here, so the form stays te.

So the important beginner point is:

• drekka takes an object
• te is that object
• the form happens to look simple here

Í staðinn is a very common expression meaning instead.

In this sentence, it means something like:

• I drink tea instead
• I have tea instead

It usually refers back to something understood from the context, for example:

• Viltu kaffi? = Do you want coffee?
• Nei, ég drekk te í staðinn. = No, I’ll have tea instead.

So í staðinn often depends on an implied alternative.

For a learner, it is best to treat í staðinn as a set phrase meaning instead.

You can know that it is historically related to the noun staður (place), but in normal use, learners usually just memorize:

• í staðinn = instead

That is the most practical approach.

Later, you may also meet related expressions such as:

• í stað þess að... = instead of ... / rather than ...

But in your sentence, í staðinn works as one chunk.

Yes. Icelandic word order is flexible, but it follows important patterns.

The neutral order here is:

• Ég drekk te í staðinn.

You can also front í staðinn for emphasis:

• Í staðinn drekk ég te.

Notice what happens: when í staðinn comes first, the verb drekk still stays in the second position. This is a very important Icelandic rule, often called the V2 rule.

So:

• Ég drekk te í staðinn. = neutral
• Í staðinn drekk ég te. = more emphasis on instead

Both are good, but they feel slightly different.

A few pronunciation notes:

• Ég starts with a y-like sound, not a hard English egg sound.
• In drekk, the r is tapped or rolled, not the usual English r.
• The kk in drekk is pronounced strongly; in careful Icelandic speech, it may sound a bit more forceful than English k.
• í sounds like ee in see.
• The ð in staðinn is like the th in this, not thin.

So the hardest parts for English speakers are usually:

• the soft sound in Ég
• the Icelandic r
• the ð in staðinn

They are related, but they are used differently.

• í staðinn = instead
• í stað þess að... = instead of ... / rather than ...

Examples:

• Ég drekk te í staðinn. = I drink tea instead.
• Ég drekk te í stað þess að drekka kaffi. = I drink tea instead of drinking coffee.

So in your sentence, í staðinn stands on its own because the alternative is already understood from context. If you want to say explicitly what something replaces, Icelandic often uses í stað þess að...