Step 1: Understand the question.
We must find what is made using the bacterium Propionibacterium shermanii. So we recall where this microbe is used.
Step 2: Recall the bacterium's role.
Propionibacterium shermanii is a bacterium used in dairy fermentation, especially in ripening certain cheeses.
Step 3: See its special effect.
During ripening, this bacterium produces a large amount of carbon dioxide gas.
Step 4: Connect gas to the product.
The trapped carbon dioxide makes the big holes seen in Swiss cheese. This is the well-known sign of its action.
Step 5: Rule out the other options.
Curd uses Lactobacillus, bread uses yeast, and toddy comes from fermenting sap. None of these use Propionibacterium shermanii.
Step 6: Final answer.
This bacterium is used in making cheese.
\[ \boxed{\text{Cheese}} \]