In a dry skillet over medium heat, toast the shredded coconut, stirring frequently, until lightly golden and fragrant.

Add water and granulated sugar to the skillet. Stir to combine.

Bring to a gentle simmer and cook for about 5 minutes, stirring occasionally, until the sugar is fully dissolved.

Remove from heat and let the mixture steep for 15 minutes.

Strain through a fine mesh strainer to remove the coconut.

Stir in vanilla extract and a pinch of sea salt.

Let cool completely before storing in a sealed container in the fridge for up to one week.