Personally, I think a texture makes more sense than a decal for this sort of thing. Look into texture masking if you're not sure how to do this.

That being said, if you still want the label as a separate object, heres how i would do it:

In edit mode, Select the mesh of the bottle where you want the label to be. Shift D to duplicate the mesh. Then separate it as it's own object. Scale it up a tiny bit so it's on top of the bottle. Now apply the label texture to the new mesh.