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In basics, it is a milkshake that tastes like beer, but it is never revealed how (it is probably just a milkshake with beer poured on it). It is not known whether or not it is a truly alcoholic beverage. Lister has taught at least one of the Red Dwarf vending machines how to create it. (RD: Waiting For God)
It is mentioned several times in Series I. Confidence listed it as one of Lister's greatest inventions with the quote "another great idea from the people who brought you beer milkshakes!" In the same episode, Lister spilt it down himself whilst getting emotional over a romantic film. (RD: Confidence and Paranoia)