Private label for someone else
Updated
A restaurant or a retailer asks you to make their sauce under their name. It is volume without marketing and it is a different business from your own brand.
What you are actually selling
Production capacity and regulatory standing. They want a product they cannot make because they do not have a licensed facility, a process filing, or the knowledge.
That is a genuinely valuable thing to sell, and it is worth being clear that it is what you are selling rather than thinking of it as a sauce order.
The economics
Lower margin per bottle, higher and more predictable volume, no marketing cost and no shelf competition. It fills production gaps between your own seasons, which is worth more than it looks on a margin line.
Against that, it builds no brand of your own. A producer whose capacity is fully committed to private label has a manufacturing business, which is a fine business and not the one they usually set out to build.
What to agree
Who owns the recipe. If you develop it, say so in writing, and say what happens if they leave. A recipe you developed and they own is a customer you cannot replace.
Whose name and address goes on the label, which is a regulatory question rather than a branding one: the label must identify who is responsible for the product.
Minimum volumes, lead times, and who holds the packaging inventory. Private label packaging is theirs and useless to anyone else, so agree who pays for what is left.
When to say no
When it needs a separate process filing you would not otherwise do and the volume does not cover it. When their requested reformulation takes it outside what you can make safely. And when it would consume the capacity your own brand needs in season.
The last is the quiet one. A private label contract that fills your fall is a contract that stops you supplying your own accounts at the only time of year they sell well.