The yeast will only be happy up to some maximum concentration - think thin slurry not viscous mud. Then, as the alcohol concentration rises it inhibits the yeast from making more so production slows down. Lots of water keeps the concentration lower for the same number of gallons of alcohol so the yeast keep making more, using up more of the sugar. If you optimize for max alcohol per unit of sugar you need lots of water.
Make your on alky
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