What can add flavour to drink and sandwiches I observe (7)
I believe the answer is:
aniseed
'what can add flavour to drink' is the definition.
(absinthe etc)
'and sandwiches i observe' is the wordplay.
'sandwiches' means one lot of letters goes inside another (to sandwich is to block something in).
'observe' becomes 'see' (observe can mean to see something).
'i'+'see'='isee'
'and' placed around 'isee' is 'ANISEED'.
(Other definitions for aniseed that I've seen before include "Flavouring of sambuca" , "Plant" , "Licorice-like flavour" , "Eased in (anag)" , "Liquorice flavouring -- ie Danes (anag)" .)