Bring chicken broth and 2 1/2 cups water to a boil in a medium saucepan over medium-high heat. Gradually whisk in grits; reduce heat to low. Cook, stirring occasionally, 10 minutes or until creamy.
Gradually stir in cheese, and cook, stirring occasionally, 5 minutes or until cheese is melted and smooth. Stir in butter and salt; season with pepper to taste.
*Vegetable broth may be substituted.
Try This Twist! Shrimp and Grits: Soak 1 lb. large peeled raw shrimp (31/40 count) in 1/3 cup dry vermouth 10 minutes; drain. Sauté shrimp in 2 Tbsp. melted butter in a skillet 2 to 3 minutes or until done. Season with salt and ground white pepper to taste. Serve over Smoked Gouda Cheese Grits. Makes 4 to 6 servings. Hands-on time: 10 min., Total time: 35 min. (including grits).