From Chanticleer Society

Grenadine is a sweet red syrup used in a variety of cocktail recipes. While originally made with pomegranates, in the early 1900's it started to be simply made with red food coloring, sugar, and something to provide a slightly tart flavor profile. As long as it "tasted" like a sweet pomegranate syrup might taste like, it was deemed acceptable.

"Modern American Drinks" by George Kapeller (1895) appears to be the first bartender manual which references grenadine as an ingredient for cocktails. It refers to the "Grenadine Cocktail" as basically any cocktail that calls for sugar syrup, which you use grenadine instead.

Prior to grenadine as a cocktail ingredient, raspberry syrup would be used to the same effect.

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