Measure ½ cup of coconut flakes and place them in the center of a small piece of cheesecloth. Tie the cloth up into a little pouch and set aside.

In a small saucepan, prepare the simple syrup by combining the water and granulated sugar. Stir and drop in the coconut flakes wrapped in cheesecloth. Bring the saucepan to a simmer and continue to let it simmer over low heat for 5-10 minutes.

Empty the cans of coconut milk and condensed milk into a blender and then add two-thirds of the grogue or rum.

Place the cheesecloth in a mesh strainer and hold the strainer over the blender. Pour the simple-syrup over the cheesecloth-wrapped coconut into the blender jar. You can either discard the cheesecloth and the coconut or reserve half of the steeped coconut and add it to the blender, to give the ponche some texture.

Blend everything together on high speed for 1 minute. Taste the ponche and adjust the amount of alcohol to your liking.

Pour the ponche into a large bottle or pitcher and let it chill for at least 2 hours (a full 24 hours is recommended)

Garnish with a few toasted coconut flakes (optional) and serve straight up or over ice.