“Liquid smoke” flavoring is synthetic or chemically based.
Just like it sounds, liquid smoke is made just with smoke and water.
How does it work? Liquid smoke is made by channeling smoke from smoldering wood chips through a condenser, which quickly cools the vapors, causing them to liquefy (just like the drops that form when you breathe on a piece of cold glass). The water-soluble flavor compounds in the smoke are trapped within this liquid, while the non-soluble, carcinogenic tars and resins are removed by a series of filters, resulting in a clean, smoke-flavored liquid.
If you’re curious, see our experiment of making liquid smoke with a kettle grill, a duct fan, a siphon, and an ice-chilled glass coil condenser.