As usual, it's a metaphor.
Premium in the sense of 'reward given for a specific act' is synonymous with prize.
Both words refer to a Contest frame with multiple entries, judgements, and prizes awarded.
And then the winners get to brag about their prizes (even if they're imaginary).
So premium butter is the same construction as Blue Ribbon Beer or New York Times Bestseller 'The Joy Luck Club'. Essentially the prize/premium name is used as an appositive, and then a modifier, to the following noun, which may be a proper noun.
As to when a noun that modifies another noun becomes an adjective, the Academy decides.
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