I am going to explain this to you...
The teacher hasn't set the rules - the school has. This is mainly for health reasons - sugar on teeth all day is not good. Spilt juice is not good. Spilt water is fine.
The teacher has explained that if the squash is in a coloured bottle, it will not be noticed by him or the other children, so would be ok.
He doesn't want other children noticing squash in a clear bottle and thinking they can all bring squash in as this causes problems for him and for the children's parents...
For example, I would never send my child to school with squash as I prefer them to have water in the day rather than sugary drinks - if my child came home saying someone has squash and they want to too, this would be very annoying and make my life difficult.
He has given you an option to keep it quiet and ensure your child will drink at school.
You are teaching your child to flout rules with this ridiculous entitled attitude. If you choose to put squash in a coloured bottle - you are the one teaching your child to be sneaky. That is your choice.The teacher is allowing this as he doesn't have time to police the bottles and wouldn't notice what was in them if they are not clear....
Squash in a clear bottle will be pointed out by the other children and then he has to do something about it. Squash in a coloured bottle won't be noticed.
I hope that explains it for you.