What is coconut sugar and how is it made? Contrary to what many believe, coconut sugar is not made from the milk or coconut meat itself, but is derived from the flowers of the coconut palm. The sap that drains from these flowers is subjected to a heating and condensation process until a thick syrup is obtained. By having a low glycemic index, this makes coconut honey increase blood sugar levels much less than white table sugar or other sweeteners such as honey. Ingredients: Coconut nectar and water.