Dive Brief:

• HelloFresh acquired Green Chef this week, adding organic vegan and gluten-free menus — as well as paleo and keto meals — to its meal kit offerings, the company said in a press release. Terms of the deal were not disclosed.
• Green Chef is expected to contribute $15 million in quarterly revenue to HelloFresh, according to a regulatory filing, reported Bloomberg. It also will expand the HelloFresh footprint in the United States.
• The press release announcing the deal said Green Chef will synergize with HelloFresh's operations, logistics and procurement departments. HelloFresh will add its first office and production facility in Colorado, where Green Chef is headquartered. The meal kit company will also integrate Green Chef personnel into its operations and culinary teams.

Dive Insight:

HelloFresh, which is the worldwide leader in meal kits — and second to Blue Apron in the U.S. — is setting a course to take the #1 spot this year. It's been making steady progress on that goal recently. When Germany-based HelloFresh went public on the Frankfurt Stock Exchange in November, it was growing three times as fast as Blue Apron, reported Recode. HelloFresh announced its quarterly earnings on Wednesday, and is profitable internationally — and close to breaking even in the United States.

On Tuesday, Blue Apron shares dipped to $2.07 — down 4.61% — on news of the Green Chef deal.

But even as its competitors grow, the silver lining for Blue Apron could be the small size of the meal kit business and its potential for growth — as well as Blue Apron's viability as an acquisition target. Gabelli & Co. analyst Matthew Trusz told CNBC last month that Walmart is a "logical buyer" for Blue Apron. The meal kit market is potentially an $8 billion opportunity, but it was only about one-tenth that size a year ago, Trusz said.

Blue Apron could also take a page from HelloFresh's game plan and increase its offerings through M&A. If it were to merge with a smaller organic-focused meal kit provider — potentially something like Purple Carrot — it could feature more organic and vegan options.

Whether HelloFresh gets to number one in the U.S. by organic growth or by another acquisition is yet to be seen, but its strategy and operations are well regarded. However, meal kit competition is getting stronger. Kroger, Publix, Amazon and Walmart have developed meal kit lines. Albertsons bought Plated last year. 

Offering meal kits in physical stores — which is clearly part of the strategy for Kroger, Publix, Walmart and Albertsons — could also help win the category. Blue Apron said it wants to sell its meal kits in stores, but HelloFresh plans to stay with online subscriptions for now, according to Bloomberg.