It's obvious. The German keeps fish.
Code:
NATIONALITY Norwegian Dane Brit German Swede
HOUSE yellow blue red green white
PET cats horses birds fish dogs
DRINK water tea milk coffee beer
SMOKE Dunhill Blend Pall mall Prince Blue Master
We know three things to start (milk in the middle, Norwegian on the end and the blue house beside the Norweigian). The house colours were the next easiest thing to figure out since we knew where blue was and the green and white were buddies so there were only two combinations even if you were guessing.