Liquid smoke is essentially smoke-flavored water. Smoke consists of two phases: microscopic droplets that make it visible as a haze, and an invisible vapor. It turns out that much of the flavor and preservative materials are in the vapor, while the droplets are largely aggregates of tars, resins, and heavier phenolic materials, including the PAHs. PAHs are largely insoluble in water, while most of the flavor and preservative compounds do dissolve to some extent. This difference makes it possible to separate most of the PAHs from the vapors and dissolve the vapors in water.