Update a validation list based on value of another cell

I've attached sample dummy data to illustrate what I'm trying to do.

In sheet 1, there are two columns, Category and Subgroup. The cell validation for Category is pulled from the category list on sheet 2. Basically, what I want to happen is depending on what is selected as the category, only the related sub-groups would be populated in the sub-group validation dropdown list. In other words, if Fruit is selected as the category, I only want Apple, Orange, Pear, Banana, etc to be in the validation drop down list for the sub group. If vegetable, then only Corn, Green Bean, Cucumber, and Peas should be shown.

I've included two options for the relationship list as I'm not tied to either style and not sure which would be easier to work with.

I've tried going down a couple of different paths but keep getting caught at a dead end.

Thanks for your help with this in advanced. I appreciate it.