It is normally set at part level....I presume you have modelled the cup & the water separately...?
I have my Solid Edge Options set so that the material properties are selected before I start any part level geometry.
From the assembly though, there are a couple of options....assuming you have not applied any material to the models already.
On the "Inspect" tab, run the Properties command, and it should prompt to set material fo each model individually, or globally for them all. [depending on your desired outcome].......or, right click over the part itself [or the listing in the pathfinder] and Edit, or Open into the part and double click on the material listing in Pathfinder, the set your material to water.
Design Manager Streetscape Limited
Solid Edge ST10 [MP0] Classic [x2 seats]