I feel like I gave in to peer pressure and set a bad example and now I feel like crap. ... I already seem to have a bit of a reputation with this friend as a "prude" about raising my boys but I don't think this is a negotiable area.
You know what really annoys me regarding alcohol, sleeping around, drugs, whatever? The fact that the people who do it try to coerce others into doing it as well. "Oh come on, don't be square!" "It's fun, you'll like it!" "You're a prude, why don't you loosen up?" etc. But the fact that they feel the need to try and involve others in whatever activity it is tells me that they know there's something wrong with it, and that they want others to participate so they don't feel bad about it.
And you know what? Frack them. It is very hard to resist peer pressure, but in some cases, for your (general you) health, for your children's sake, whatever, it must be done. What's the worst thing that can happen if you resist peer pressure? You're called a prude? Been there; done that: "I AM a prude; what's your point?" Your friends leave? Well, if they're encouraging underage drinking, I wouldn't want them in my house in the first place.
Don't let them make you compromise your morals. So what if they think you're a prude? At least your child isn't going to be arrested for underage drinking or caught driving while under the influence. Stick to your guns. I'm not sure I would be able to continue a friendship with someone who didn't share my morals.
... That said, I don't have a problem per se if a parent lets their child have a sip of wine or a drink of champagne at a wedding or something. My parents let me have sips, and I don't think they were prepared for the gagging noises and the, "I can't breathe! Are you trying to kill me?!" that resulted.

Aside from one or two sips (and I mean sips that I spat out!!), I only drank an entire glass of alcohol for the first time when I was about 26. I'm 37 now and still have never drank more than one or two glasses of liqueur or sangria in my life. Wine makes my chest close up, and champage is nasty stuff, never mind harder stuff. Yuk.
A few years ago when I had a birthday dinner, I invited my cousin who was about 15 at the time. I was with my brother, SIL and some g*a*y friends of ours. One of them ordered some sherry or liquer or something for the table, and the waitress did not realise my cousin was not 18, so she brought her a glass as well. Cousin got this "deer-in-the-headlights" look. I said, "It's one glass (it was a shot glass), so drink it if you want to, or don't, but I'm telling the waitress not to bring you any more." Cousin drank it (our laws about drinking are not as strict as in the States) but didn't like it. "Ew, I'm never drinking THAT again." I just smiled inwardly because I knew the stuff was vile and she'd hate it. Heh heh. At least now Cousin has a cool story to tell about the g*a*y men who bought her alcohol! And she doesn't drink now even though she's turning 19 next month.
I meant to add: My point in that last paragraph was, if you make alcohol (or any "vice") seem like a "forbidden fruit", teens are going to want to try it. However, if you act like it's not a big deal at all within your moral code, then teens will likely not see why everyone gushes over drinking when it tastes horrible or whatever. It's a fine line, but it can be done. My parents managed it with myself and my brother, and I try to adopt that attitude with my cousin (or at least I did when babysitting her - she's too old for that now!).