Under the item description for Holy Water, we see the following:
A cleric or paladin may create holy water by performing a special ritual.
The ritual takes 1 hour to perform, uses 25 gp worth of powdered silver, and requires the caster to expend a 1st-level spell slot.
This very closely matches one of the uses of the Ceremony spell:
1 hour (Ritual)
Components V S M (25gp of powdered silver; consumed)
Bless Water: You touch one vial of water and cause it to become holy water.
Do clerics and paladins actually need to have access to the Ceremony spell in order to bless water into Holy Water, or can they always do it (provided that they have the five pounds of silver powder, 60 minutes, and 1st level spell slot)?
Best Answer
No, there are two different, but similar, ways to create holy water
One method, outlined in the PHB under the description for holy water, is not a spell but a special ritual. The other method, outlined in Xanathar's, is a cleric/paladin spell.
One subtle benefit to having a spell and non-spell way to create holy water is that non-cleric/paladins can gain access to the ability by taking the Ritual Caster feat for example.1 Also, the non-spell version will allow a cleric/paladin to be able to create holy water even if they do not have the spell prepared or are out of spell slots.
Yes, they are very similar, but that does not mean we can assume they are the same thing. Nowhere does either ability reference the other or link them in any way save similar wording. In lieu of official errata or clarification saying that they are the same method the only way to treat this RAW is as two different ways to create holy water.
Jeremy Crawford also supports this reading:
1 - thanks @HellSaint